Last month, in an interview with the Financial Times, Caroline Wagstaff, the London Market Group’s (LMG) Chief Executive, described the UK’s insurance industry as the “crown jewel that no one pays attention to”.
At a time of widespread concern for the UK’s economy and businesses, the LMG found that job numbers in the City’s insurance market were at their highest level since records began in 2013.
Wagstaff highlighted the $180 billion in gross written premiums written in London last year, almost double the level of a decade ago, as threats ranging from climate change, shipwrecks and cyber-attacks demanded the city’s underwriting expertise.
Wagstaff wasn’t entirely correct, the UK media is starting to sit up and pay attention.
PHA’s internal research reveals both a substantial and consistent increase in interest in insurance stories across the UK’s media in the last six months. National media interest has increased by over 20% in that period, while across all UK online press, there was a 59% increase from the same period before.
Of course, the industry has not itself avoided the cost-of-living crisis. Stories that stole the headlines this year included the average UK car insurance quote hitting new records, nearing £1,000. Labour has even promised to ‘tackle’ the soaring cost of car insurance in its manifesto. Home insurance premiums have also gone through their increasingly expensive roofs.
Against the backdrop of these headlines, it has been crucial for insurers to speak publicly to tackle some of the misconceptions. According to the Association of British Insurers (ABI), inflationary pressures mean insurers are spending more on claims and costs than they are collecting in premiums. This is a crucial time for insurers to stress their societal role as financial shock absorbers.
As reported in the Financial Times, 2023 saw a record-breaking number of natural catastrophes that caused at least $1 billion in insurance losses. The number of events in the USA alone would have beaten the global record for almost every other year. Increasingly, insurers are facing up to the realities of climate change but can play a bigger role in how a reaction to it is shaped.
In 2018, a remarkable paper called “Does Climate Change Affect Real Estate Prices? Only If You Believe In It” was published by three American academics.
The findings revealed that house prices were becoming sensitive to whether people believed in climate change. In fact, in areas particularly vulnerable to climate change, house prices could remain surprisingly resilient if there was also a large amount of climate denial present. In areas where it was less common, the opposite was true.
But what do elasticities to climate risk have to do with anything? Well, they show us when it comes to insurance, people really do put their money where their mouth is, but also why the insurance industry can play a much bigger role in advising on the risks around climate change.
Since this study, a crippling home insurance crisis has gripped America, with many owners in vulnerable areas now unable to afford price rises or being unable to get coverage altogether, which is usually a prerequisite, as in the UK, to agree to a mortgage in the first place.
As risks and interest heighten, hearing from the insurance industry has never been more important. Insurance is still about personal relationships, and it is important to retain the personal element of the market. As the notions of trust and societal purpose are playing a greater role in the industry than ever before, insurers can provide expert advice, speak out to tackle wrongly held beliefs about the industry, and drive change by pressuring policymakers.
For example, after several uncomfortable years of premium rises, a new report by Marsh LLC has found the cyber insurance market in the UK is now more buyer-friendly, with abundant capacity and intense competition among insurers, driving rates down. These are market successes that can be celebrated with positive and proactive PR.
After several tough years, good news can be just around the corner, so there’s no excuse for a lapse in coverage.
Get in touch if you’d like to discuss how our industry experts at The PHA Group can support your insurance business to build trust with the audiences that matter most to you.