What is contributing to the hardening of the market and how can it affect your cover prospects?
A piece by Insurance Times explores the recent appetite to cover terrorism and cyber warfare risks, as well as why these risks can be difficult to determine. NDML discusses the hardening of the insurance market and why it’s all the more important to work utilise the service of a good broker.
How the Hard Market affects your business
The hardening of the market is evident; insurers are reducing the flexibility of their terms, aren’t as open to negotiation and are reducing their capacity for cover. One cause for the continued hardening is recent global discord and the propensity for conflict to no longer be limited to boots on the ground. Online conflict is now the preferred tactic and everyone, everywhere, is at risk.
Russia’s invasion of Ukraine has perhaps been the straw that broke the cyber-camel’s back. Since February 2022, cyber warfare has been much more closely highlighted in the news, and as a result, businesses are requesting their cyber portfolios to be reviewed.
Make no mistake, as a broker dedicated to our clients, we think this is wonderful and a welcome change. Businesses understanding and researching emerging threats is something we strongly advocate for. Yet, the risk of a pariah state, and vigilante groups such as Anonymous, now possibly looking to bring down local businesses through cyber attacks, is something that insurers simply cannot analyse accurately enough.
Steve Coates, speaking to Insurance Times, said “The fact remains that the damage to property that can be caused by nation states is of a scale that the insurance industry simply could not insure given the potential exposures.” NDML note that many brokers and insurers say they provide cover for terrorism, however these policies will often not cover all the necessary details and risks. Having a broker on your side who takes the time to understand your specific needs and reviews the intricacies of your cover is essential to staying fully protected.
What is Claims Inflation?
This year firms have been grappling with the pain of rocketing inflation. From steel, to polyester, to packaging. “There isn’t a material cost that hasn’t increased,” says Daniel Walton to The Times. As a consequence of inflation, insurers profits are likely to take a hit.
This will surely, and has started to, have a knock-on effect for premiums and claim costs. The cost of premiums has risen already and is expected to rise further as insurers make up for their lost income. And as the cost of materials go up, so too does the cost of the consequential damage and replacement the materials, hence premiums must rise to prevent underinsurance.
Underinsurance is a huge risk factor for many nightlife businesses. At NDML and the Romero Group, we highly recommend clients arrange a valuation as to ensure they are not underinsured. Being underinsured means, in the event of claim, businesses will not be fully covered and will have to cover the difference in cost themselves.
To learn more about underinsurance and the risk of being underinsured, see our Romero Group underinsurance whitepaper and podcast here.
How to manage insurance costs
Premium inflation, underinsurance, cyber security, terrorism risks; keeping on top of these additional risks is the sign of a top-quality broker. Regular check-ups with clients, getting to know their business and understanding unique risks are vital steps to building that all-important account-handler : client relationship.
Working with a broker that know both your business and the industry is the best way to ensure your back is fully covered. NDML are able to navigate the recent global risks, necessary additional facets to your cover, the industry’s claims inflation and rising premium. NDML, with our relationship with insurers, are able to manage for you the best deal. Contact NDML today to get your risk assessments, cyber policies, terror cover and valuation reviewed.