Rating agencies remain the most influential tool when assessing insurer security

Insurer security remains a top priority for corporate buyers despite a recent easing of concerns over insurance company financial strength, according to a new survey.

The results of the survey showed that security ratings can affect both the volume of business that risk managers place with an insurer and, to a lesser extent, the price they are willing pay.

Despite recent questions over the dependability of ratings agencies, they remain the most influential tool when assessing insurer security, with 39% ranking them their top source.

More than a third of buyers (34%) said that security ratings influenced the volume of business they are willing to place with a particular insurer “between 90% and 100% of the time”. A further 25% said it did so 50% - 90% of the time, meaning that nearly 6/10 corporate risk managers are usually influenced by the ratings when making buying decisions.

Ratings agencies are, however, by no means the only factors. 28% of buyers said that brokers and other third party sources were their top source of information, whilst 23% cited their own evaluations.

75% of those who replied said that ratings also affected the prices they were willing to pay for cover, with slightly more than a quarter (28%) saying they did so most of the time.

The research also found that, once an insurer has achieved an acceptable security level, other factors came to the fore, especially long-term relationships and underwriting flexibility.

The Association of Insurance and Risk Managers (AIRMIC) surveyed members to gather the research. “Our results demonstrate that AIRMIC members continue to pay a great deal of attention to the security of their insurers,” said Insurance Steering Group chair Kip Berkeley-Herring. “However, although ratings agencies remain very important to them, most buyers prefer to consult a variety of sources before making a decision. It’s no longer the case that a good security rating on its own is enough for most insurance buyers.”

81 buyers, with a total annual spend of approximately £1.2bn took part in the survey, which was completed in December. AIRMIC represents more than 800 risk managers, including 75% of FTSE 100 companies.