European risk managers have issued a damning indictment on the performance of their insurance partners during the pandemic.
The Federation of European Risk Management Associations (FERMA) conducted a survey of its members to ascertain just how well they had managed the impact of the COVID-19 pandemic.
It was bad news for the insurers. When asked 76% agreed or strongly agreed that there was not an insurance product available that meets their needs.
The survey found that the insurers are not keeping up with the changing nature of risk and the emerging threats that non property exposures pose cannot find a home with the underwriters.
FERMA President Dirk Wegener said: “Insurance, unfortunately, has not provided the support organisations need for their business interruption. There is a strong appetite for a future financial solution. We have a long relationship with the insurance industry. We want it to be part of a solution by contributing not just risk transfer but also risk expertise to a combined public-private initiative.”
Approximately 60% of respondents said they had a reasonable or very great interest in a non-damage business interruption (NDBI) insurance product.
Those surveyed were firmly in favour of EU intervention. Risk managers (85% of those surveyed) said they would welcome an increased role by the EU in the management of a future pandemic or other large systemic event.
“Perhaps this is driven in large part by their view (72% of respondents) that EU-policy interventions during this crisis have had ‘no impact’ on their organisations,” it said. “As this survey has shown, there is insufficient financial protection from the insurance market for organisations in the face of systemic events.”
It is a tough pill for the market to swallow as the pandemic has laid bare the disconnect between the needs of the customers and the products available.
FERMA is keen for the insurance sector to play a part alongside national governments in any future solutions. It is telling however that FERMA believe the key benefit the industry can bring to the solution is its risk expertise rather than any meaningful level of risk transfer.
Hardening rates have firms considering their level of cover with insurers and the option of self-insurance via other risk instruments such as captives is becoming ever more attractive.