Deteriorating market conditions fuelling use of captives

Rising premiums and a reduction in the scope of cover and capacity are fuelling the use of captives amongst risk professionals, according to Airmic’s latest market survey.

The association’s Harsh Market report also confirmed an increase in the number of challenges to claims throughout 2020.

Conducted over two weeks in January 2021, the survey canvassed members of the Airmic Leadership Group of risk professionals and insurance buyers.

It confirmed that the trend highlighted in its previous report from September was gathering pace, as even more buyers are now considering forming a captive in response to deteriorating market conditions. Amongst respondents whose organisations do not already have a captive, 23.4% are now considering forming one in response to the hard market, up from 20.3% in the previous survey.

More Airmic members than in the previous two Pulse Surveys say that they are seeing reduced capacity, increases in cover exclusions, and poor and late communication from insurance partners. Higher rates continue to be a characteristic. Some insurers have withdrawn from certain lines of insurance altogether.

In response to the findings, the association has reiterated its call to insurers and brokers to build a stronger culture of rapport with customers. Renewal teams should have greater diversity of background and skills, it suggests, rather than just being the team that strikes the deal with the client.

Julia Graham, deputy CEO and technical director at Airmic said: “One major change we would like to see is a shift away from the tripartite relationship between insurer, broker and buyer, towards a ‘roundtable relationship’ which draws in a broader range of perspectives.

“We urge underwriters and brokers to include colleagues from their claims teams and loss adjusters more actively in the renewal and account management processes.”

    Share Story:

Recent Stories

Financial institutions were early adopters of cyber security and insurance. Are they still on top of the game?
Managing huge amounts of sensitive data online makes financial institutions a prime target for hackers. As such, the sector was an early cohort for insurers in creating cyber cover. Since then, the market has evolved almost beyond recognition. It continues to challenge itself to this day, complying with rigorous regulatory demands and implementing avant-garde enhancements to keep abreast of the ever-changing risks. Published June 2021

Manufacturing: An industry at risk amid great technological change
Of the many sectors of business, manufacturing companies are among the most at risk from cyber threats. How has the sector evolved to make it so vulnerable and what does the task of managing cyber exposure in a manufacturing company look like? CIR’s latest podcast with Tokio Marine HCC sought to answer all these questions and more. Published April 2021