What’s happened with insurer Hiscox is just another example of how the insurance industry is now entering the most prolonged hard market in living memory.
After the financial and reputational losses sustained during the pandemic, we are now deep into a cost-of-living crisis as well as the ongoing war in Ukraine – both causing widespread operational disruption to businesses coming on top of Brexit.
A changed risk environment is taking hold, impacting not only the affordability of business insurance for SMEs – many of whom are increasingly relying on credit to pay insurance costs – but also the value for money that policyholders receive during this prolonged period of rising costs and decreases in cover reliability.
The road ahead will be difficult, but the failure to resolve spiralling costs, while disputing more claims and failing to explain where cover is being removed, could cause massive reputational damage to brokers and insurers and their relationships with policyholders.
It’s more important than ever for policyholders to review the details of their insurance contracts and to corroborate whether they are buying appropriate cover at a fair price. Following a period of repeated crises, the next few years will be critical to either further undermining, or beginning to repair, the insurance sector’s reputation.