Reputation is now a greater priority than insurer solvency, according to Airmic members
Reputational risk exposures are the subject most likely to keep risk managers awake at night, according to Airmic’s annual survey of members, carried out in June. Nearly a third – 32% - regard it as a great or very great cause for concern. The subject is now a greater priority than insurer solvency, the issue that dominated much of the past two years, which 22% still regard as a significant worry.
Getting insurance losses paid continues to cause difficulties, however, with 27% of respondents having had a claim declined in the past two years. Only 58% rated their lead insurer’s speed to pay as ‘good’ or ‘very good’.
43% of members say their level of concern about the compliance of international insurance programmes has risen in the past twelve months, whilst no one has seen an improvement. There has been considerable discussion within Airmic about the near-impossibility of ensuring that insurance programmes are internationally compliant. Failure to get it right can result in fines, non-payment of claims, gaps in cover, increased taxation and bad publicity.
The survey also found that risk management resources had been squeezed during the recession, with 54% reporting lower departmental budgets, 24% staff reductions and 34% lower bonuses or pay. At the same time, they are being asked to do more. 53% report that their responsibilities have broadened while resources are cut.
Airmic members see the soft insurance market running out of steam in all their main classes of business with more of them anticipating rises than falls in the coming year (31% v 6% in Property/Business Interruption, 31% v 7% in Employer’s Liability, 32% v 7% in Public Liability, 70% v 4% in Motor third party, 37% v 7% in D&O and 44% v 3% in Professional Indemnity).
Broker remuneration remains the issue that will not go away. 43% of commercial insurance buyers observed an increase in the number of brokers seeking remuneration from insurers for services not directly connected with the placement of individual policies. More than a quarter (28%) believe that the way their brokers are paid could give rise to conflict of interest.
“Risk managers increasingly take a broad view of their responsibilities, and it comes as no surprise to see reputational risk taking the top spot now that events have reminded us of the need to protect reputation,” said Airmic chief executive John Hurrell.
“The relatively low profile of insurer solvency is a tribute to the way insurers handled the financial crisis. Unfortunately having the cash to pay a claim and actually doing so promptly are two different things; this remains an enduring cause for concern and even dissatisfaction in some cases.”
