The majority of businesses in the UK and Germany are exploring captive insurance, according to surveys conducted by the UK risk and insurance management association, Airmic, and the German risk and insurance management association, GVNW in January and February 2020.
The survey concluded that 65 percent of UK and 53 percent of German firms are exploring alternative risk transfer solutions, including new and expanded use of captives, for their 2020 renewals.
Meanwhile, it found that over a third of businesses (33 percent UK, 46 percent Germany) plan to invest more in risk management solutions.
The survey stated that the impact of the hardening market goes beyond price, with reduced capacity, an increase in exclusions, and unavailability of cover for some, having a significant impact on 2019 renewals.
Directors and officers (D&O) rates have been hardest hit, the survey revealed with over 80 percent of respondents noting price rises in the UK and over 60 percent in Germany. In the UK, 13 percent have seen D&O rates more than double.
Julia Graham, deputy CEO and technical director at Airmic, commented: “Today’s market conditions are notably different to previous hard markets which were cyclical and focused on price.”
Graham added: “Today, by comparison, we are also seeing reduced capacity, an increase in exclusions and in some cases the complete withdrawal of cover. There are also early signs of changing claims behaviour which we are monitoring closely. This is a seismic shift. To stay relevant, the market must become more customer-centric, make better use of technology to improve service, and provide more innovative solutions.”
According to the survey, there is a frustration at poor or late communication from insurance partners (43 percent UK, 62 percent, Germany) and over half of policyholders are only partially satisfied or not satisfied with service from brokers.
Joerg Henne, managing director of GVNW, said: “Communication and transparency need to improve and good risk management should be rewarded.”
“Businesses understand their risks better than ever before and the fact that we are seeing risk professionals exploring alternative risk transfer solutions for 2020 renewals should be a wakeup call to the market,” he explained.
