By Max Carter, Chief Executive Officer of New Dawn Risk
The combination of a perception that insurers are looking to ‘wriggle out’ of paying covid-related business interruption claims and general insurance premiums rising as a result of hard-market reinsurance rating pressure will further dent consumer confidence in the value of insurance. Back in 2017, a survey by comparison site Claims Rated[1] found that only 37% of younger consumers (aged 16-29) believed that an insurance company would pay out in the event of a claim. The PPI scandal still lingers in the memory of many, and rising general insurance premiums over the past couple of years have continued to compound the issue. In specific sectors, such as the construction industry, struggling with massive liability insurance premium increases and additional exclusions in the wake of Grenfell Tower, confidence in the value of insurance has fallen even lower.
We predict that commercial SME buyers will be more inclined to allow non-mandated insurance to lapse as they struggle with increased financial pressures from the impact of covid, justifying their decisions on the basis that insurers try to avoid claims in any case. Purchases of newer products, such as cyber insurance, will almost certainly fall off as well. It will take an industry-wide coordinated campaign to rebuild consumer trust in the industry.
[1] https://www.insurancetimes.co.uk/only-half-of-british-consumers-trust-insurance-companies-to-pay-claims/1425151.article
