In many businesses, the nerves are on edge. They are still feeling the consequences of the corona pandemic, and in July there was also the flood disaster, which damaged, if not completely destroyed, buildings, systems and machinery. The flood does not only affect the businesses which are on the rivers which quickly became torrential due to the storm “Bernd”. Many large companies located in the affected areas are also suffering the consequences because they are not supplied, because production is impaired or freight traffic has been interrupted.
“We now have more than 200 major claims in a range between 50,000 euros and 65 million euros,” reports Hartmuth Kremer-Jensen, managing director of industrial insurance broker Aon. Its customers are mainly large industrial companies who need policies against natural hazards, fires, business disruptions, hacker attacks and other risks. After claims, brokers are also your point of contact for claims settlement.
The flood disaster has other unpleasant consequences for a number of businesses. “The event will drive up the prices of insurance coverage for businesses located on rivers,” Kremer-Jensen said. But it could be costly even for businesses in areas that were previously considered safe. The recent flooding could now cause insurers to completely upset risk assessment, said Kai-Frank Büchter, German director of industrial insurance at Aon. How dangerous one-off heavy rains can be in the valleys was hardly seen by anyone. “It will be difficult for industrial companies to obtain basic insurance.
This is still bad news for the industry. Insurers have already raised prices over the past two years. At the same time, they have reduced their offer in a number of lines, strengthened clauses and increased deductibles. The fact that this happened in Corona 2020, of all places, has drawn criticism from the industry. Many businesses feel abandoned at the wrong time. In its current market report on the state of German industrial insurance, Aon calls for providers to resume a more cooperative approach. The economy is currently receiving less insurance coverage than before, is getting harder, and has to pay a lot more for it.
No more hacker attacks and natural disasters
“We have indeed experienced many difficult or protracted negotiations over the past year,” said Hans-Jörg Mauthe, responsible for the activities of industrial insurer Allianz AGCS in Central and Eastern Europe. “But we have generally been successful in finding an amicable solution with clients and brokers which will put our business relationship on a stable basis over the long term.” The companies criticized the fact that they were surprised by the decisions made by their insurers. It seems to have happened. “It’s important that we let our customers know about changes at an early stage so that each party has sufficient lead time,” says Mauthe.
Edgar Puls, chief industrial insurer and the fiercest competitor in the HDI Global alliance, demands understanding for the price increases. “We are seeing an increasing concentration of major claims in industrial insurance,” he says. Due to the increase in insured values, damages become more and more costly, and hacker attacks and natural disasters have also increased. “We attach great importance to a partnership journey with our clients and with brokers”, underlines the boss of HDI Global. But insurers should also have the opportunity to rebuild profits after years of losses.
Aon criticizes insurers for the lack of courage to find solutions to serious or complex risks and the desire to offer coverage on a larger scale. In cyber insurance and directors’ liability in particular, the gap between supply and demand continues to widen. In order to meet the demand of a business, brokers often have to use many more insurers than before. This complicates everything, especially in the event of a disaster.
Jochen Körner, boss of insurance broker Ecclesia, gives the company hope regarding the volume of insurance coverage offered. “It is difficult, but not impossible, to get the necessary capacity in the market even when prices have increased,” he says. “It has never been more important for businesses to have the right broker on their side.