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 Some insurers have withdrawn from certain lines of insurance altogether.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.”
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