MY VIEW - Public sector insurance market

Monday 3 February 2020

The public sector insurance market never stands still.

One of the genuine attractions of being involved in the public sector insurance and risk market is that it never stops challenging us. It constantly pushes us to improve and seek out new solutions to the problems and opportunities of the day.

The challenges are as diverse as they are in number. Be it ways to reduce the scale and frequency of catastrophic claims; the impact of climate change; Brexit; managing the consequences of austerity; dealing with the drain of intellectual property in the market (as many experienced technicians retire) or considering the role social value has to play in the procurement of insurance.

And I haven’t even mentioned the challenges of the risk protection arrangement and the like, aimed at local authority maintained schools.

Paradox

That is why the 2020 market offers us a real paradox: for certain elements of the market, the competition in terms of the number of insurers participating in tenders has never been greater, while at the same time, the presence and threat of large catastrophic events and subsequent claims, has never been higher.

Fuelled mainly by advances in medicine, and changes to the discount rate, the number and frequency of large claims now dwarfs any previous period - and that’s not just claims arriving today, which relate to policy periods many years ago. Many of the large losses currently are contemporary risks, such as cyclists, highways and motoring.

Coupled with the impact of austerity, which is now making its presence felt particularly around the lack of highways investment, we have a heady cocktail of greater risk and more choice of carrier. 

What is clear however, is that all parties to the market will need to gear up today to face higher claims payments in the future. This will be influenced by increased premium contribution and greater self-funding levels, which will turn the spotlight onto the risk management processes and systems of the insured. The processes of today will be the defence to claims of the future.

Arguably the market has never needed the presence of risk managers more than it does today.

Philip Farrar, National Development Director, Risk Management Partners and ALARM Co-opted Director

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