State of the industry

2023 was a difficult year for the insurance industry. The impact of record-high inflation hit insurers hard, with a particular strain placed on claims departments. This, the lasting impact of COVID-19 and global conflicts all resulted in a “hard market” and challenging conditions for consumers.  

While some of these pressures remain, and as always, emerging risks will play their role, we have emerged into a year that we’re predicting will see insurers’ cost increases minimal or flattening (except for motor). Areas particularly benefitting are financial and professional insurance (professional indemnity & directors’ & officers’ insurance).  

This is good news for consumers, but we advise you to keep in communication with your broker. Maintaining regular communication ensures that your broker can work on your behalf to explore the market, taking advantage of increased insurer capacity, competition, and lower reinsurance premiums to secure a preferable result for you.   

What are some of the key insurance trends and predictions businesses should look out for in 2024? 

Claims inflation

Over the last few years, various unexpected factors have combined to drive up materials, labour, and logistics costs, resulting in an increased cost to the insurer to settle a claim. Ernst & Young estimates that for every £1 in motor premium an insurer collects, they pay out £1.14 in claims and expenses. This will remain a challenge for insurers in 2024 as they balance competitive premiums and higher claims costs.  

Supply chain issues

The disruptions caused by the COVID-19 pandemic and global conflicts have highlighted vulnerabilities in global supply chains, affecting various sectors, including manufacturing, retail, and logistics. Proactive risk management strategies and working with your broker to assess factors like supplier dependencies, geopolitical tensions, and environmental impacts will reduce the potential risk of supply chain disruption to businesses.   

Underinsurance

Underinsurance will continue to cause concern for businesses and property owners in 2024. Recent statistics indicate that 83% of UK property is underinsured.
Inaccurate valuations of property, stock, machinery, and assets can all result in underinsurance, leaving you potentially out of pocket if you make a claim, but keeping your broker informed of changes in your business will reduce the risk. 

Cyber security

Research shows that businesses are five times more likely to experience a cyber attack than a fire, yet only 36% have cyber insurance. With the escalating frequency and sophistication of cyber threats, cyber insurance should be a key consideration for all businesses.  

Consumer Duty

The Financial Conduct Authority’s (FCA) Consumer Duty rules, introduced in 2023, require insurance companies to act in good faith to provide positive outcomes for their customers. Among other benefits, insurers and brokers will need to ensure they provide clear and understandable communication, and products and services that meet your needs and offer fair value, helping you to make better financial decisions.