SEIB Insurance Brokers has warned of a “hardening” insurance market as a result of the Covid-19 pandemic and bad weather. In a statement, it urged individuals and businesses to review their insurance policies.

“There has been a lot in the press that some did not have the cover they expected when the pandemic hit,” said the statement.

“On the back of Covid, and many claims earlier in the year due to the weather, we are in what is known as a ‘hardening’ insurance market.”

In a hard insurance market, premiums rise at a rate above what would normally be expected. .

“We haven’t seen a hard market since 2001 and therefore many [people] have not experienced the volatility that could follow,” said SEIB’s deputy CEO, Suzy Middleton.

“It is imperative for those looking for insurance cover not to chase the cheapest rate but to check very carefully that you have the cover you need with a reputable company.”

The statement explained that several factors have resulted in the market hardening:

  • Before Covid struck in March 2020, insurance premiums were already being squeezed.
  • In the last half of 2019, property insurance rates were affected following several significant fires — over 20 happened with pay outs of over £10 million each.
  • The Ogden rate, which works out lump sum payouts for personal injury claims, has increased, resulting in larger settlements per case to ensure adequate funds for lifetime care if required.

“Storms Dennis and Ciara caused widespread havoc in February 2020, leading to insurance settlements in excess of £400 million,” said the SEIB statement.

“Low interest rates and high reinsurance rates compounded these problems, all of which have now been dwarfed by Covid-19.

“People requiring insurance cover in niche sectors, including the equestrian market, may be able to minimise the effect of the hard market premium rises through using the services of a specialist broker with detailed experience of the market.”

SEIB’s CEO Barry Fehler added: “My advice is to work with a specialist broker who understands your needs and prepare for your renewal earlier than normal. This will give more time to find the best package for you in the current market.

“Be flexible. The market has changed and you might need to make changes to your cover, to ensure you get what you need at a desirable price.”