COVID-19 and the impact on insurers losses
Have
you seen an increase in your insurance costs and the cover that is now
available to you from your broker and insurers?
Insurance rates have been on the increase for the last nine consecutive quarters,
before the impact of COVD-19, due to several factors including:
Significant
global catastrophe losses ($100bn+ per annum) in 2017-2019 (hurricanes,
windstorms, typhoons, wildfires etc) which has fed through to the UK
market.
·
UK
claims for flooding/storms are increasing in both frequency and severity on an
annual basis.
·
Double-digit
attrition claims inflation on Motor Fleet and Liability losses due to Brexit
and exchange rates, growing claims litigation culture, regulatory reforms (e.g.
Ogden Rate).
·
Property
losses from cladding since the Grenfell residential fires and various
food/hotel fires have had subsequent impact.
This
has meant that several insurers and Lloyds syndicates now no longer offer cover
options to certain areas including the care and charity sectors and means:
·
Fewer
markets to compete, so insurers can drive pricing and impose cover changes.
·
Insurers
are now highly selective when looking at new clients and will target the best risks
based on CQC and claims performance.
Impact across the Charity and
Hospice sector
In these uncertain times, the impact of COVID-19 has led insurers to review
potential financial quantum and exposures around potential liability and
business interruption claims including those due to the closure of many hospices
and charity shops. Several actions have been taken by insurers to the sector including:
· Total withdrawal from offering
insurance solutions to the sector
· Most insurers looking to pause
offering terms to potential new clients
· Most insurers looking more closely
at new startup operations
· Most insurers are looking to break
existing Long-Term Agreements (LTA), through increases to rates and premiums
and updating policy wordings, in some cases using a combination of both.
·
Cover
changes are not blanket, some markets are excluding COVID-19
totally including to the public liability covers, others are looking to offer inner
limit of cover around COVID-19 on public Liability with severe restrictions,
and other continue to offer wider protection and limits
· One insurer in the sector is restricting
cover to go beyond COVID-19 exclusion and now to exclude communicable disease which
could include Norovirus or the flu as examples.
Although you
may not have been affected by the market changes yet due to having a renewal
date outside of March-July 2020, it is unlikely that you will not be affected moving
forward. We would recommend that you contact
your insurance broker at least 3 months ahead of a known renewal to discuss
options and market movements, as these continue to change on a regular
basis.
How can we assist?
With over 100 years of experience in the not-for-profit
sector, Towergate Insurance are
specialists when it comes to finding the right solutions for charities and
hospices and work with a range of A-Rated insurers to provide the right
protection for each individual client. We don’t just see ourselves as an
insurance broker, but more as a risk management partner. Our job is to help our
clients reduce risk and the threat of disruption in in the first place.
To find out
more about how we can assist you or advise on market updates, please call James Anscombe on 07973 784006 or email
[email protected].
Towergate
Insurance is a trading name of Towergate Underwriting Group Limited. Registered
in England Company No. 4043759, Registered Office: 2 Minster Court,
Mincing Lane, London, EC3R 7PD. Authorised and regulated by the Financial
Conduct Authority.
Sources:
https://www.fitchratings.com/research/insurance/commercial-insurance-market-is-hardening-07-05-2020
https://www.munichre.com/topics-online/en/climate-change-and-natural-disasters/natural-disasters/the-natural-disasters-of-2018-in-figures.html
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