Corporate Insurance Review

2019 saw the beginning of a, sometimes considerable, uplift in premium rates within certain sectors of the insurance market. This hardening market was evident even before the advent of Covid 19.

Currently, the insurance classes most affected have been the financial lines insurances such as Professional Indemnity, Directors’ & Officers’ Liability, Crime and Cyber Liability, together with certain market sectors such as Construction, Food and Leisure. This has been caused by various factors including poor global claims experience and a reduction in capacity arising from some Insurers withdrawing from underwriting such unattractive risks. Furthermore, we have seen this increasing of rates spreading to other areas of the market as is the normal experience when the insurance market cycle turns.

The previous hard market occurred following the World Trade Centre and, once the effect of this had run its course, the last 15 years has seen an increasingly “soft” market with competitive premium terms and provision of broader cover protection.

During this period, insurance brokers increasingly commoditized the transacting of insurance so that a Company’s renewal of its insurance programme became an almost automatic process. Clients’ expectation was to see cost savings at each renewal, or, at least, existing rates being maintained.

A corollary of this was that the renewal process became very reactive rather than proactive with brokers rolling over existing arrangements in what became almost a “rubber stamp” exercise. This was not an issue during the soft market conditions as the entire renewal process was not a challenging exercise.

All this has changed with the current hardening conditions in the insurance market which, for many brokers working in the industry today, is the first time they have experienced this phenomenon.

To this situation has been added the impact of the pandemic which, primarily, has resulted in a considerable slowdown in the insurance transaction process because of increased challenges arising from home-working and the need to rely solely on telecommunications for negotiating with Insurers.

As a result, for a large number of our Clients, we have seen many instances of brokers not managing their Clients’ expectations and advising substantial premium increases with only days to go before renewal, and little time to consider alternative options.

Against this background, a prime objective must be to ensure that the right messages are being communicated to Insurers and that a Company’s risk profile is being properly presented and positioned so as to provide a clear differentiation thus justifying better treatment from Insurers in terms of cost and cover.

Matrix focus on insurance 24/7 which has given us an in-depth perspective of the capabilities and resources of the broker and Insurer community. Our extensive project work also provides us with an ongoing insight to current and future market developments together with the implications for our Clients.

In this market environment the challenge facing the insurance buyer is how best to meet the requirements for reviewing and validating the corporate insurance arrangements in the most efficient manner possible in order to satisfy the operational and corporate governance needs of the organisation.

Our fully independent insurance programme audit and review can provide the most effective solution by establishing the optimum insurance programme strategy and giving the necessary peace of mind both internally within the business and for external stakeholders.

Our specialists work in parallel with the normal annual insurance renewal process to minimize the impact of a hardening market and maximise our clients’ market opportunities.