Broker clients cutting cover as economy worsens – RSA

Economic turmoil is leading to a significant shift in the insurance purchasing habits of UK firms, according to RSA’s latest Broker Pulse Survey, published today (11 November 2022).

The survey revealed that 60% of brokers have received feedback from clients that economic uncertainty is a common concern, with 47% of these customers changing or cancelling their insurance cover as a result.

Over half (57%) of brokers saw policies altered as a response to rising energy costs and around 41% said high wage demands were a key issue.

The research surveyed 207 UK brokers on 20 September 2022.

RSA commercial lines managing director Lee Mooney said: “The increase in businesses changing their policies reflects the anxiety that UK organisations are feeling.

“With many not sure if they will be able to survive rising costs, they are taking any means necessary to make ends meet. In some cases, this means cancellation of, or failure to take out, necessary insurance policies – leading to insufficient cover for their businesses.”

‘High-risk strategy’

Nearly a third (30%) of brokers reported that personal accident insurance is the most likely form of cover to be reduced or altered by clients, because of their economic concerns.

Legal protection, product liability and self-employed and sole trader insurance follow close behind at 25%.

On the other hand, only 21% of brokers noted that public health is a challenge for clients.

Mooney added: “This is a high-risk strategy – underinsurance might be a short-term fix to a cost crunch but could lead to serious consequences when dealing with unexpected business disruption.

“It’s an area where insurers and brokers need to continue collaborating, providing solutions, education and awareness to help customers facing a future that is increasingly uncertain.”

In terms of underinsurance, 93% of brokers said they believed this posed a major risk to UK businesses.

However, 71% of brokers believed the insurance industry was doing enough to make sure that businesses are getting the best policy for the best price.