Risk management body Airmic has warned the insurance market that it must improve on its service to corporate clients or risk triggering a long-term change in insurance buying habits. The warning follows the publication of two surveys conducted by Airmic and its German equivalent, GVNW.

According to the reports, the majority of UK businesses (65%) are looking at turning away from traditional insurance in their 2020 renewals and are exploring alternative risk transfer solutions, including new and greater use of captives. Over a third, 33%, plan to invest more in risk management solutions. The corresponding figures for firms in Germany were 53% and 46% respectively.

Overall, the studies reveal very similar trends in both countries. Insurance rates have risen for almost all businesses (94% UK, 93% Germany and the hardening market has been accompanied by reduced capacity, an increase in exclusions, and unavailability of cover for some, having a significant impact on 2019 renewals.

D&O rates are also shown to have been hardest hit, with over 80% of respondents noting price rises in the UK and over 60% in Germany. In the UK, 13% have seen D&O rates more than double.

There is also frustration at poor or late communication from insurance partners (43% UK, 62%, Germany) and over half of policyholders are only partially satisfied or not satisfied with service from brokers.

Deputy CEO and technical director at Airmic, Julia Graham said: “Today’s market conditions are notably different to previous hard markets which were cyclical and focused on price. Today, by comparison, we are also seeing reduced capacity, an increase in exclusions and in some cases the complete withdrawal of cover.

“There are also early signs of changing claims behaviour which we are monitoring closely. This is a seismic shift. To stay relevant, the market must become more customer-centric, make better use of technology to improve service, and provide more innovative solutions.”

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