Price is still the key purchase differentiator, no matter what extra services insurers offer

Where exactly is the growth? Last week at the annual risk managers’ conference in Manchester, the only really noticeable difference was the return of Aviva to the corporate market. And that’s because rival insurers were shouting from the rooftops that the accompanying land grab would come at the expense of rate increases.

If they’re right, it’s an important point, except that this competitive landscape hasn’t really changed in years. Smug brokers have been pointing out over the same period that clients simply cannot escape the affordability trap and that any strong argument for cover to increase due to the rise in economic woe is still not stacking up. Rates will remain flat, the brokers argue, and to hell with the rhetoric emerging from the insurer chief executives sat in ivory towers.

Meanwhile, the risk managers were sanguine at the prospect of having to report sharp price increases back to their boards, despite surveys pointing to the contrary. And this is simply because supply is outstripping demand and price is perceived to be the key purchase differentiator, whatever the value of extra services insurers offer.

The latest thinking is that it will take a large event to turn the market. Take Aviva as an example: on the face of it, its gap analysis points to more growth in the corporate space than in SME business over the next couple of years. If you need further convincing, take a look at our emergency budget coverage this issue. Biba believes that the increases to the lower rate of the insurance premium tax (IPT) from 5% to 6% and the increase to the higher rate of IPT from 17.5% to 20% is a direct tax on cover, and small businesses will be forced to reduce their insurances or continue without adequate protection. Whether the large corporates continue to do the same remains to be seen, but given that the size of the prize is larger, it’s probably worth insurers re-entering the space to be in a better position for when a hard market shows its face again.

And you’ll really know it’s happening when the next risk managers’ conference is not quite so cheery as it has been in prior years. IT

For full coverage of the Manchester Airmic conference see StrategicRISK, sister magazine to Insurance Times, which has an audience of European corporate risk managers. Visit