Insurance needs to adapt to stay relevant – Hurrell
Many of Airmic’s recent activities have the aim of making commercial insurance relevant in a rapidly changing business world, according to chief executive John Hurrell. His comments came as the association put the final touches to a range of initiatives to be unveiled at next month’s annual conference.
In the past few years, the association has campaigned for reform of insurance lawto introduce proportionate remedies for ‘innocent’ non-disclosure , and it has unveiled a series of initiatives to boost claims certainty, including model clauses for insertion into insurance contracts. It has also highlighted the need for new products and commented on shortcomings in those that have made it to market.
Far from being disconnected or ad hoc manoeuvres, he says these efforts are principally about making sure that insurance continues to meet customer needs.
“Professional buyers and the market that serves them have a shared interest in keeping corporate insurance relevant. Yet changed circumstances are threatening its role and value. The percentage of the corporate risk map coverable by insurance is smaller now than at any time in the past. Its position will continue to be diminished unless the market adapts, and provides more dependable products,” he says.
“Airmic members increasingly have to justify buying cover from a particular provider when it could be purchased more cheaply elsewhere or, indeed, may not be absolutely necessary at all. If they cannot be 100% sure that large claims will be paid promptly, then there will be pressure to buy less insurance and for it to become commoditised.”
Hurrell identified two critical trends in a recent article in Post Magazine.Firstly, modern business models are evolving at an unprecedented rate towards dependencies that have not in the past been well understood or served by insurers, such as technology, brands, supply chains and R&D.
Secondly, “escape mechanisms” available to insurers to avoid claims by using technicalities such as basis clauses, conditions precedent, warranties and innocent non-disclosure are becoming increasingly troublesome.
“Our members tell us that for major claims there is now a level of scrutiny, including the involvement of coverage lawyers, which at the very least creates delays and extra costs, and can potentially result in an unsatisfactory outcome from the insured's point of view,” he says. “I believe the market has largely accepted Airmic’s argument that current insurance law has undermined confidence in the product, and that reform is in all our interests.”