Sky-high premiums, extensive exclusions, carefully-worded treaties, lack of capacity, high deductibles or even no cover at all are causing Airmic members problems.
It is small wonder risk managers are looking beyond the insurance market for their salvation, calling on the government for assistance as an insurer of last resort for terrorism and seriously evaluating the use of mutuals, captives or self-retention.
This scenario would probably have been the case even without the events of
11 September. The hard market was beginning to show its teeth this time last year and 11 September acted as a catalyst to provide risk managers with an unwelcome early Christmas present.
True, 11 September has thrown up the new spectre of worldwide terrorism, but its effect on insurance markets has been to exacerbate a growing trend.
In short, towards the end of the millennium, insurers reached the conclusion they were not operating in a viable competitive fashion - markets had been too soft for too long - and they needed to redress the situation in order to return to profitability.
A spirit of realism washed over the markets - insurers targeted viable contracts, insureds realised the buyers' market was ending.
Now, the events of 2001 have fast-forwarded the cycle; in some insurance sectors there are no insurance sellers to provide a sellers' market.
Last month an Airmic and Association of British Insurers (ABI) survey warned that the lack of suitable insurance cover against terrorism risks could cripple UK businesses.
All the industries covered in the Airmic/ABI insurance market `snapshot survey' considered current terrorism insurance issues represented a potentially critical risk. And any reduction in current capacity to insure liabilities would force companies to drastically alter their business practices, if not cease trading entirely in certain sectors, the survey suggested.
It is time to make decisions about insurance cover and risk management strategies. It is time to restore stability and certainty to the market, not least because by so doing, it will prove to the world that the disruptive and unnerving effects of terrorism are not continuing to wreak havoc within the UK.
The situation is so critical that Airmic makes no excuses for recently calling upon the UK government to help resolve matters with some `joined-up thinking' - not to bail out UK businesses, but to provide a stable trading platform upon which a commercial insurance market can operate.
For all terrorist activity, governments must accept the role of insurer of last resort for losses above a significant level.
If the UK government, and others throughout the world, can agree such a level, then the insurers, freed from the burden of unlimited liability, would be able to calculate the risks much more precisely. And a market for insurance cover for terrorism can be created, with organisations free to make a decision as to whether or not they will buy insurance or manage the risk in other ways.
These developments mean the upcoming Airmic conference 16-18 June in Birmingham will have an increased relevance by concentrating on helping risk managers to tackle the challenges of the hard market. Airmic has already adjusted its conference programme to assist delegates in finding practical answers to `hard' questions, but it also stands ready to find time and to create a high-profile platform for a welcome news announcement.
There are still places available for the Airmic conference.
Contact Airmic at
6 Lloyd's Avenue,
London EC3N 3AX
Tel: 020 7480 7610
Fax: 020 7702 3752