In his third and final piece in this series of articles on the effects of inflation, Russell Group’s Suki Basi argues why corporates and their (re)insurers need to work together to help successfully navigate a path through this difficult time for the market…

Uncertain times

In my previous two articles, I outlined why UK inflation continues to rise and the impact of this trend on the (re)insurance market.

In my final article today, I will outline why it is important that corporates and their (re)insurers work together during this difficult time. 

Combatting inflation and the risks associated with it, such as underinsurance, requires better communication between insurers and their policyholders in explaining the risks of not having sufficient insurance coverage. 

Many experts point out that focusing solely on the price of the insurance premium is the wrong way to understand insurance and why adopting a more holistic approach may be prudent. 

Also, considering an organisation’s potential supply chain shocks is important. Take a scenario where a factory with bespoke machinery catches fire and needs to be replaced. The factory needs to not only understand the cost and time to replace machinery, but also that this will involve working suppliers that in many cases are smaller and facing more pressure to meet deadlines. Having good coverage will mean that they are insured for the period of no activity as they rebuild their business.  

Connecting the shocks 

Given the supply chain issues sparked by recent events such as the Covid-19 pandemic and the Russia-Ukraine conflict, the question on policyholders’ minds should not be less coverage but whether there is a need for broader and deeper coverage.  

An understanding of the interconnectedness of events and how they impact a (re)insurer or corporates’ balance sheet should be front of mind.  

Therefore, this begs the question, if events are connected, why can’t risk be? 

In speaking to many members of the Russell Working Group, which comprises senior risk managers from FTSE 100 and FTSE 250 companies, there is a greater desire on behalf of corporates to have coverage that is more holistic and fits a company’s needs, rather than being given a standard package that is not adequately suited to their business exposures.  

Russell believes that such an approach can be achieved through good data analytics, which power scenario analysis allowing any organisation and their (re)insurers to truly understand and know their portfolio exposures.   

It is this approach that Russell has been pioneering for almost 30 years, which is imagining outcomes for uncertain times. 

Suki Basi is managing director at Russell Group