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A survey of a global coalition of insurance brokers finds that nearly all believe the top concern facing their clients is the availability and pricing of coverage.
The issue is particularly challenging for buyers with large natural catastrophe and supply chain exposures, according to the survey of the 25 member firms of the Independents, an international coalition of privately owned insurance brokers and risk management services firms.
Of the brokers surveyed, 96% said their clients are most concerned about price and availability of coverage, and 48% said their clients have significant concerns about managing risks with fewer resources.
“The central theme through here to my mind was actually about price,” said John Eltham, head of North American business at Miller Insurance Services Ltd. in London and founder of the Independents.
The survey found that as clients renew programs, 28% are seeing property insurance rates increase 5% or more, and 24%—particularly those with natural catastrophe-exposed properties—are seeing rate increases of 6% to 10% or more. Clients that have avoided losses or have limited natural catastrophe exposures still are seeing some rate reductions, however, particularly in Europe, Asia and South America, according to the survey.
As insurance prices rise, many purchasers are responding by trying to take a more informed position in their insurance buying and identify value for price.
“Some of them are looking at increased retentions,” Mr. Eltham said. “Corporations are not afraid to take risk, it just needs to be at the right level.” The survey showed 48% of respondents saying their clients are raising deductibles or retentions.
The survey showed 32% of respondents saying their clients are seeking higher limits on insurance programs, and 40% saying their clients are looking to add or increase coverage to address such exposures as cyber risk, political risk and terrorism.
Supply chain closely followed natural hazards as the risk that brokers feel their clients consider most significant, with 47% of brokers citing natural hazards and 42% citing supply chain risks. Mr. Eltham noted the increased awareness of supply chain exposures after the global disruptions caused by last year's March earthquake and tsunami in Japan and flooding in Thailand later in the year.
He noted, however, that with insurance markets still discovering the actual cost of the Thai flood, buyers might face challenges getting the supply chain coverage they seek as the year goes on.
“The story isn't around the 1/1 renewals that just happened. I think it will be through 2012 as supply chain and business interruption come more into focus,” he said. “Probably just at a time insureds say they want more coverage, the markets may say, ‘Ouch! We need to look at this more closely.'”