Corporate risk managers grouse over insurance; 2/3 would gladly reduce

Corporate risk managers are grumbling about their insurance partners, lamenting mysterious pricing and coverage and walking away increasingly convinced that insurance will play a lesser role in their future risk management strategies.

Some 54% of insurance buyers and risk managers are dissatisfied with their property insurance program and it’s more than just the common grousing about rates and market conditions, a survey by Advisen and Archipelago has shown.

“It’s clear from the results that risk managers value and want more transparency from their insurers about how the markets underwrite and price their risk,” Archipelago CEO Hemant Shah said. Insurance buyers seek “a ‘goldilocks’ just-right zone of actionable insight on the drivers of their overall risk and the actions they can take to improve their risk.”

That’s not what they are getting. Some 69% are sufficiently fed up to suspect insurance will play a reduced role in how they approach commercial property risk in the future. 18% question the very fundamentals of insurance.

But that’s risk managers talking the talk. Of those saying insurance will dwindle, half say they will retain more risk, two fifths say they will invest in resiliency and 10% will seek alternative forms of risk transfer. But for walking the walk, only 16% are actively seeking alternatives to insurance.

Things might look rosier if risk managers could crack the mystery of pricing and coverage.

Half of survey participants question the price to value calculus and two thirds lament non-transparency of pricing. Pricing follows insurer risk experience elsewhere, not the risk profile presented by individual clients, participants suspect.

“The questions risk managers generally find the most difficult to answer focus on the value proposition and return of investment of insurance and the drivers of their total cost of risk,” report authors noted.  Hence a wish list topped by more predictability in pricing and better alignment with client risk, then more transparency on pricing.

The salt in the wound is that risk managers are feeling overworked just getting to the insurance pricing that they don’t understand. The minutiae of insurance purchase are burdensome. Constant preparation of statement of value data is a particular "pain point" for the majority of risk managers. 77% call it "complicated" either as an outright painful process or one that is getting worse year by year as insurer demands grow.  Only 19% understand how that data is used.

Given their choice, they’d put the greatest amount of their time into strategic risk planning and promoting loss prevention. Actual time spent on the job is dominated by measuring, managing insurance purchase and overseeing claims. High-minded strategy and prevention are eternally delayed.

The Advisen and Archipelago survey brought in 209 risk managers / corporate insurance buyers with over $100 million each in total insured value. Fieldwork was run in Q1 2022.

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