VIEW: On the evolving insurance market conditions

There is much debate about the extent to which we have entered a true hard market. Evidence from our own members strongly indicates that price rises in some classes have indeed been significant and renewals have been challenging.

However, the current conditions are different from previous hard markets which were mostly about price. Today we are seeing a broader range of factors, including a negative impact on deductibles and capacity, the late timing of presentation of renewal terms, and in some cases the complete withdrawal from certain classes of cover or sectors. We are also starting to see a negative impact on claims.

The biggest challenge for our members has been the speed of change and lack of communication and consultation. Decision-making has become centralised, with little inclusion of the end client, to the extent that it has affected the timing of renewals. And while in many cases price rises appear justified, in other instances pricing feels aggressive and opportunistic.

We have suggested three key areas where the market can better support policyholders: improve pricing communication; start the renewals process earlier; and reward strong risk management. For risk professionals, this is the time to be proactive and take the lead. Preparation has never been more important. Policyholders should understand and be able to articulate their risk appetite with absolutely clarity. Renewal submissions must be first-class, tailored to business and sector and highlighting risk management achievements and plans. Communication with the C-suite is also vital. Regular constructive discussions – possibly even inviting the CFO to a renewal meeting – help to manage expectations so there are no nasty surprises.

These are challenging conditions for all, but there is a greater opportunity here. The prolonged soft market has contributed to insurance being seen as an increasingly commoditised purchase. The harsh market is moving it back up the boardroom agenda. This can used to remind organisations of the value of a professionally constructed insurance programme. And that's got be be a win for all.

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