The top priority risks are also among the most difficult to insure
Cyber, reputation and lack of innovation are top concerns, Insurance Act already influencing actions
The annual Airmic member survey shows a continuing shift away from concerns about physical risks towards intangible perils, combined with the observation that the insurance market remains unable to cover many of the most business-critical exposures.
Other key findings:
* There is a strong trend towards insurers using late notification to challenge claims;
* Dramatically improved member access to the board;
* Rapidly growing concern about late claims payment and insurance documentation.
The three areas of risk that give members the most worry are Cyber causing business interruption (cited by 45.5% of members as a top-three concern), Cyber causing loss or theft of personal data (44%) and Reputation (31.5%). It is the first time that Cyber has occupied the top two slots.
The survey finds that all three types of cover are among the more difficult to acquire, with over half of respondents lacking cyber-insurance. Yet under 20% have a high level of confidence in their organisations' ability to manage these risks. The main reasons for not buying cyber-cover are inadequate coverage, relevant insurance being unavailable and high cost (especially for theft/loss of data). Take-up of reputation-related insurance is even lower, at 4%, with lack of availability of relevant cover the main factor.
By contrast, the top physical risk (catastrophic events) was mentioned by less than 20%, significantly fewer than those who chose another intangible, contract risks and exposures.
Asked to assess the insurance market, three factors dominate the list of concerns: lack of innovation (59%), broker conflicts of interest (41%) and errors and delays in documentation (41%). On a positive note, many respondents had noticed advances in the insurance market, with greater capacity (63%) better prices (58.5%), wordings (47%), improved limits (45.5%) and greater relevance (34%) all frequently mentioned.
There has been a big change of sentiment on a number of key topics. Concern about lack of innovation has more than doubled in two years. The number of members saying that claims had been queried on grounds of late notification in the previous three years has risen from 28% in 2014 to 44%. Since insurance buyers' practices are unlikely to have changed much, claims departments appear to be adopting a new, more challenging approach.
More follows
More members are worried about broker conflicts of interest, increasing from 8% two years ago to 41%, and about broker-controlled capacity - up from 3% in 2014 to 25%. Insurance documentation issues have also become a priority, with 41% mentioning it compared to just 9% in 2014.
Encouragingly, risk managers now find it dramatically easier to gain attention from the top. Last year, 43% lack of access to the board as a number one or two concern. In 2016, this had reduced to 18%. They also report greater support and leadership from the board on risk issues.
Insurance Act - how risk managers are responding
The survey shows how the Insurance Act is already influencing behaviour. 71.5% are reviewing internal processes for collecting information to meet the fair presentation requirements, 43.5% have reviewed policy documentation and 21% say they already contract to the requirements of the Act. Just 9% had still to prepare for it.
One likely benefit of the legislation was highlighted by the fact that Basis Clauses (soon to be made unlawful by the Act) were cited as a reason by 26% of those who had had a claim challenged, reduced, delayed or declined in the past three years. An even higher proportion - one in three - said it was because they had been unable to provide information required by the insurer. One in five reported having had difficulties with a claim in the past three years.