Feedback from Airmic’s annual conference this month indicates that risk managers feel the insurance sector is out of touch with their risk agendas
By Jon Guy
While UK prime minister Boris Johnson faced a sudden vote of confidence this month (June 2022), the insurance industry is facing a similar threat from risk managers – however few market voices believe that this confidence question has come out of the blue.
Risk managers, brokers and insurers headed to Liverpool in early June for the Association of Insurance and Risk Managers in Industry and Commerce’s (Airmic) annual conference. Talk outside the conference room revealed that risk managers are starting to question the value they get from their cover.
The biggest concern from buyers is that times have changed and the insurance industry is struggling to change with it.
Cyber, climate change and environmental, social and governance (ESG) credentials are all seen as risks that need to be addressed now, according to risk managers. They feel that although these issues are immediate and growing, insurers are still reluctant to engage in any meaningful way.
On the first day of the conference, there was a focus on Airmic’s ESG hub, where climate change was described as the “greatest risk transfer of all”. Water supply risks and a responsible net zero transition were also up for discussion, alongside a session on what good cyber data and communication looks like.
However, the most telling panel session was saved until last and spoke volumes for the mood in the exhibition hall.
The topic was diversity, equity and inclusion – the theme was “are we on the same page yet?”
While brokers and underwriters may think that the insurance market is doing a good job, there remain mutterings that end clients and the industry are not on the same page in terms of what they believe are the risks that need to be addressed.
Meeting clients’ needs
The UK’s economic outlook has also dampened the spirits of risk managers, who say they are under pressure to access cover for business interruption (BI) and contingent BI due to the pressure on the global supply chain and fears of recession thanks to inflation and the soaring prices of energy and goods.
At Biba’s annual conference in May 2022, there was much talk around the growing levels of underinsurance. At Airmic, the talk instead centred around the need for insurers to provide the necessary capacity for the risks businesses said keep them awake at night.
It is a tough place for brokers and insurers to find themselves in.
The new risks that clients are seeking to mitigate come with no data on claims, exposure or aggregation risk.
To avoid these risks in any meaningful way until the data is there to support appropriate pricing looks to be a wise course of action.
The downside is that it runs the risk of the insurance market being seen as unable or unwilling to meet clients’ needs, painting a picture of the industry being increasingly irrelevant.