Making predictions in this world is a particularly hazardous occupation.
Nostradamus springs to mind as someone with a monopoly on predicting the future but did he, really?
Nostradamus attended Avignon University but was forced to leave after just one year following an outbreak of an infectious disease. Sound familiar? Well, he didn’t see that coming.
Still, what goes around (in 1520) comes around (in 2020). The disease in question in 1520 was The Plague, for those of you who are wondering if Coronavirus has been around for a little longer than thought.
I much prefer the concept of being prepared for what might lie ahead. It is a simple case of ‘managing expectations’. In the business of risk and insurance broking, what lies ahead is largely determined by what has gone before. And what has gone before in our world has proved to be extremely problematical for insurers.
Grenfell has caused many insurers of professional indemnity risks to exit the market.
Winter floods in this region were quickly replaced by Spring droughts and who knows, Summer floods? Our weather is becoming more extreme. We used to refer to some flood events as being “a one in a hundred year event”. Given there have been two such events in the last twelve years in South Yorkshire, you will understand why insurers are reluctant to listen to such missives.
Did I mention the pandemic and the economic uncertainty that follows? Insurers’ share prices took a hit at the beginning of the lockdown and this in turn impacts adversely on their underwriting capacity.
Insurers are worried.
The consequences are rather easy to predict. We are already seeing a hardening of rates in some sectors, particularly professional indemnity. We are also seeing reductions in policy coverage and the imposition of increasingly onerous terms. We are suddenly amidst a “hard market”. A buyers market has become a sellers market. Insurers with limited capacity chose where best to deploy that capacity and often those sectors seen as ‘high risk’ are left with a dearth of cover and premium increases of frightening proportions.
I fear I am beginning to sound like a BBC reporter. But far from asking questions, we are all about solutions.
The insurance market will be tough in the coming year. We won’t hide from that. We will tackle the issues early and be entirely frank with you about the likely outcome. Of course, now more than ever, it is essential to manage risk effectively. When all is said and done: those who claim less, pay less. It’s an old adage but it’s particularly true in a hard market.
And most importantly, we will leave no stone un-turned in producing the best possible outcome for you. We can’t predict the future but we can be prepared and being prepared is the key to the best possible outcomes. Perhaps if Nostradamus were alive today he might be an underwriter.
By Ian Laycock FCII – CEO and Chartered Insurance Broker