The survey revealed that the majority have seen rates rise at renewal – of those buying Directors & Officers cover, one fifth saw an increase of more than 400%. Many also complain of finding it harder to secure cover at any price, with capacity levels shrinking. 66.7% of respondents also said that they had experienced poor or late communication from their insurance partners – up from 42.6% last year.
Bruce Hepburn, CEO, Mactavish said: “While businesses across the country are working out how to prepare for a second wave, they should also be factoring in what amounts to a tsunami of insurance price increases. It will be particularly galling for smaller businesses that make it through the pandemic to find that they’ve got to pay triple-digit increases on insurance they can’t go without.
“At the end of the day, rising premiums mean more profits for insurers and brokers, and it is particularly unfortunate that policyholders actually feel that communication from the industry has declined in this period.
“This is a real inflection point for the insurers and their broking partners. They can use this period of hardening rates to demonstrate their value and treat its customers with the respect they deserve, or they can use the extra revenue to shore-up business models that are clearly broken – perhaps buying themselves a few more years of viability in the process. Ultimately, no industry has a God given right to exist and I’m pleased to see Airmic members proactively exploring other avenues to risk transfer.”
Positive change
Mactavish shares the concerns of many Airmic members about the way in which insurance is arranged in the UK. For example, Mactavish says there is growing ‘standardisation’ of policy wordings, and this is leading to confusion as to what is covered, and an increase in claims being contested – something we have seen with business interruption insurance claims linked to COVID-19. Some 64% of Airmic respondents say they would like to see more innovative/tailored insurance solutions for their organisations. Similarly, 41% of those surveyed said they would like to see a better understanding of their organisation's insurance needs.
It was for these reasons that Mactavish launched its Reform Agenda at the beginning of 2020 with the intention of publishing a list of recommendations for change at the end of the year.
Commenting on the current situation, Hepburn added: “These are not problems caused by Covid-19, it’s merely an exacerbating factor that has shined a light on what are long-term structural problems in the industry. Diminished technical skills, one-size-fits-all policies, unnecessary claims disputes and wild swings in pricing are an inevitable outcome of a situation in which the financial success of brokers is often more aligned with insurers than policyholders.”
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