The insurance sector experienced ‘soft’ market conditions for almost two decades until mid-2018 and clients got used to demanding and getting premium reductions from compliant brokers and underwriters who were concerned to maintain market share.

But then things changed. Reductions in market capacity combined with a series of serious losses in the catastrophe and reinsurance markets dented the profits of many underwriters and caused shareholders to demand a rapid return to profitability.

As a result, the insurance market has now ‘hardened’, causing premiums to increase and policy terms to be more restrictive; underwriters have less appetite for the more exotic classes of business due to shareholders’ demands and more restrictive terms being imposed by reinsurers.

All these problems have been compounded by the outbreak of the Covid-19 pandemic at the start of this year. Many underwriters have been seeking to resist coronavirus-related claims on the basis that “it was not factored into our rating models”, “it would bankrupt the industry” or “it is not covered under our wording”.

Not surprisingly, numerous legal actions have been initiated against prominent underwriters to recover Covid19 losses against policy wordings that were not designed to provide such cover. There is an increasing groundswell of public and official opinion that the insurance industry should be contributing to financial losses suffered on account of Covid-19 and “sharing the pain” in helping national economies to recover.

Whatever the outcome, the pandemic event seems certain to cause record losses across the global insurance industry. There is going to be a further realignment of capital in the insurance and reinsurance markets, and the market is going to ‘harden’ even further. The next round of renewals for insurance programmes promises to be much tougher than that envisaged at the start of the year.

There are not many brokers around today who have sufficient ‘hard market’ experience to help their clients through the coming storm. Sovereign Insurance Services (SIS) does have such experience within its ranks, as well as access to the necessary international market resources to lessen the likely adverse impact on clients’ businesses. We are also fortunate enough to have substantial international market presence through our Sovereign Group client base portfolio that will enable us to assist clients with any dramas that might be lying in wait.

For all current and potential clients, if ever there was a right time to undertake an unbiased review assessment of your corporate and personal insurance programmes, that time is now. In many cases, insurance programmes will have been allowed to renew, year after year, without proper review.

Business models and profiles – as well as personal insurance needs and requirements – have changed significantly in recent times – and so has the insurance market. These changes will be accelerated and magnified by the ‘Covid-19 effect’. SIS is available to undertake such insurance reviews at no cost and provide clients with the help and advice that will be needed to get them through the critical period ahead.