Risk managers and financial executives who are facing property renewals have significant concerns about the availability and pricing of coverage, according to a global survey.
The survey of member firms of The Independents, an international coalition of insurance brokers and risk management services firms, shows that risk managers and buyers also are concerned about managing risk with fewer resources and reduced budgets, particularly for firms with large natural-hazard and supply-chain exposures.
The survey, which includes responses from 25 member firms, finds that nearly all (96 percent) respondents believe that their insurance-buyer clients are most concerned about availability and cost of coverage. Nearly half (48 percent) also indicate their clients have significant concerns about managing risks with fewer resources, such as reduced budgets.
While price concerns are not new, John Eltham, head of North American business for Miller Insurance and founder of The Independents tells NU Online News Service, “When you get behind it, it’s actually value for money.”
He adds, “The buyers have been through a tough time since 2008. They have gotten much more in touch with their business. Opportunity and risk fit squarely side-by-side and the risk managers now want more tailored insurance programs that reflect their specific exposures, their specific risks.”
Regarding supply-chain risks, Eltham says catastrophes in Japan and Thailand have been a wakeup call to the buying community. “There’s a fragility of supply chains, particularly international ones,” he says.
As they renew their insurance programs, risk managers and other insurance buyers generally are finding a more challenging environment for transferring risks associated with facilities located in areas prone to natural catastrophes, such as earthquakes, windstorms, floods and tsunami, he says.
He adds that underwriters also have had a wakeup call, “because Thailand was considered a non-cat area and therefore the amount of modeling and monitoring of aggregation leaves a little to be desired.”
For some underwriters, he says, it’s been a surprise “just how much exposure they have. So [buyers and underwriters] are looking at the same situation—buyers saying they might want to buy more and underwriters saying they might want to cut back on this.”
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