For the British Insurance Brokers’ Association (BIBA), ‘Managing Risk’ – the theme of its 2022 Manifesto – is a continual balancing act between avoiding unnecessary governmental and regulatory intervention, and making sure that the right support is received. But at the crux of striking the right balance, according to the association’s executive director Graeme Trudgill (pictured), is the fundamental mission of making sure that customers are covered.
“What we’ve got at the moment is a really hard market, a severe lack of capacity and market failure in some cases, as we’ve seen with things like live events insurance with COVID, where we’ve had to get the government to step in,” he said. “They’ve got this new department called the Contingent Liability Central Capability Unit… which is a really important part of Treasury that looks at these interventions.
“So, you’ve already got Pool Re, you’ve got live events intervention, you’ve got COVID, designated settings care homes intervention, you’ve got the film and TV restart scheme, you did have trade credit. We’re talking about Pandemic Re, and you’ve got cladding and PI. So, there’s a lot of government involvement, which we don’t normally like to have.”
Trudgill highlighted that BIBA did a consultation with the government on the National Resilience Strategy to explore how brokers can help mitigate all the different exposures that exist. This is pivotal to ongoing discussions regarding the sharing of risk and identifying where the government needs to step in. The first point is centred on navigating the hard market, he said, as professional indemnity insurance (PII) remains a very challenging sector for brokers.
The challenges around cladding have still not dissipated, he said, highlighting the ongoing problem with the availability of adequate PII cover in respect of fire safety risks for those responsible for designing and constructing the built environment. A recent statement from Michael Gove, Secretary of State for Levelling Up, Housing and Communities aligns with BIBA’s take on the unfairness of what policyholders are having to pay as well as the need for an intervention to provide PII for professionals completing the Royal Institution of Chartered Surveyors (RICS) External Wall Survey report (EWS1 form). Gove has said that PII intervention will be in place by Easter.
“We have a lot of calls for action on all thing cladding… and there is much to do,” Trudgill said. “And we work really closely with the government and speak to them pretty much every day on this because if you can unlock the PII problem, you can do remediation work and then the property premiums can start to come right down. So, do we need a property intervention? Can we find a market solution? There’s a lot of work going on there.
“Of course, we’re really pleased that Aviva launched their facility… We’ve also got a number of commitments to help keep working in this sector - we’ve actually picked up about 40 odd, high-rise residential buildings with cladding that came to us through inquiries from MPs, or the media, or clients. [We] have been very active and now the Buildings Safety Bill is going through Parliament as well, which is critical for future safe buildings and safe insurance.”
Looking at the COVID interventions implemented during the pandemic, Trudgill emphasised how critical they have been. The film and TV restart had been a huge success, he said. The live events reinsurance intervention, which is relatively new, has been very welcome and covers COVID cancellation if there’s another lockdown. BIBA does think it could have been a bit wider, however, and is lobbying to get elements like non-appearance cover for the artist to be included.
“So, if Mick Jagger gets COVID and the Stones can’t play that night, the existing scheme doesn’t cover that, but we’re thinking it could be expanded to do so,” he said. “We’re also a bit worried about these deadlines in April and in September when these schemes expire. Our point being here that they should stay in place until market capacity returns. So we’re pushing for that in our meetings with Treasury. Then similarly, with the care sector, the designated settings intervention ends on March 31, and we think that could be extended as well.”
Another core area of focus for the oncoming year is something that hasn’t happened yet but the insurance market has pinpointed as something that ought to happen – a Pandemic Re-type solution. The insurance industry just doesn’t have the capability to pick up such a fundamental risk as pandemics, he said, so the question is how to counter that going forward – and whether the government and industry can work together to potentially cultivate a public-private reinsurance solution that will work to the benefit of all associated stakeholders.
