US and UK risk managers divided on carbon emissions
Miller Insurance Services Limited (Miller) recently undertook research into the insurance buying habits and views of UK and US risk managers at AIRMIC and RIMS respectively, in order to compare and contrast their views on the risk issues on both sides of the Atlantic.
“It is fascinating to contrast the opinions of risk managers in both the UK and the US. The notable area of difference is related to the importance of carbon emissions risks. Managing risks associated with this issue is now appearing on the Board agenda of a number of UK companies. This is not the case in the US, with only a very small percentage of risk managers indicating that this risk is being considered by their Board.
“The other key finding was that risk managers in both countries are taking more control of the insurance cycle and are increasingly aware of their total cost of risk” observes Jon Warwick, Director - Corporate Risks UK and Europe.
“They are clearly saying that the insurance industry must better align itself to the specific needs of buyers. The fact that an increasing number of risk managers, both US and UK, are exploring ART options and are likely to make increased use of captives, sends a clear signal to the conventional insurance market.
“If the international insurance market does not offer stability - the risk management community will create it for themselves. Risk managers in the US and UK are adopting an increasingly strategic approach to risk funding, how they set their retention levels and their decisions to self insure. The cycle is not gone, but there is less appetite on the part of risk managers to merely accept its more volatile aspects”.
Similarities and differences
- Findings indicate that risk managers in the UK and US are experiencing a soft market but following the last spike in pricing they have repositioned their companies with a willingness to retain more of their own risk in order to smooth the cycle over the longer term. In line with the US (24%), almost a fifth of UK risk managers surveyed (17%) feel they will increase their retention levels over the next 12 months. This indicates that risk managers are asserting control over the cycle, with more refusing to seek cover for lower level policies where most rate volatility occurs. In addition, in the UK, 42% of risk managers are considering ART options; similarly, 54% of US risk managers are already using or further investigating ART.
- 58% of UK risk managers say that carbon emissions is a boardroom risk consideration, compared to only 7% in the US. However, there is uncertainty about the role of insurance to cover this risk, suggesting that further understanding and clarity about this issue would be welcome.
- There was a sharp difference of opinion between the two surveys on some of the emerging risks that businesses face around the world. For example, supply chain/trade disruption insurance is seen as important product by 82% of UK respondents. In the US only half as many risk managers saw it as a priority, suggesting that the UK is more advanced in addressing the importance of supply chain dependency.
- 69% of UK risk managers feel political risks is highly important or important, while in the US there is less importance assigned to this product with only 22% of risk managers indicating they feel it is important to purchase this cover in the next 12 months. In addition, trade credit insurance is highly rated by 49% of UK risk managers compared to only 12% of US respondents.
Click here for a copy of the report.
Notes:
During the two day AIRMIC Conference and Exhibition in June 2007, Miller Insurance Services Limited (Miller) undertook research into the insurance buying habits and views of UK risk managers. With 115 respondents taking part, the results offer an interesting insight into the current and future buying practices of this group. The data collated has been compared with a similar study commissioned by Miller and undertaken amongst US risk managers ahead of the 2007 RIMS Conference in April. It is important to note that the comparison has been made between respondents’ views, and not a controlled industry group, however, the results do identify trends in the market.
About Miller
Miller Insurance Services Limited is a leading independent specialist insurance and reinsurance broker operating in the international markets and at Lloyd's. It is a wholly owned subsidiary of Miller Insurance Investments Limited and the sole UK insurance intermediary within the group of Miller companies, which employs approximately 450 people. The Company trades under the brand name ‘Miller’ and handles premiums totalling over $1.5billion p.a. and its Lloyd’s broking origins can be traced back to 1902. Today, Miller is the only privately owned Lloyd’s broker of its size in the UK and its truly independent status gives commercial freedom when advising clients.
For more information please contact:
Amanda Richardson
Tel: +44 (0)20 7031 2677
Email: amanda.richardson@miller-insurance.com
Hina Gandhi
Tel: +44 (0)20 7031 2996
Email: hina.gandhi@miller-insurance.com