Brokers under pressure

Aviva has carried out broker research to try to gauge what impact the recession is having on each business and its clients. Unfortunately, for the majority of respondents, the credit crunch has resulted in increasing numbers of customers lapsing or reducing their insurance cover (see graph 2). Brokers have identified the construction and retail sectors as being hardest hit (see graph 1). There are positives though because businesses associated with UK tourism and takeaway food outlets are succeeding.

There is some positive news, though. Brokers saw an increase in the number of customers shopping around, which has proved advantageous to some. Around a quarter of respondents listed cash flow as the main reason why businesses are failing. Meanwhile, those surveyed identified the construction and retail sectors as being hardest hit while only 1% identified insurance.

"There are a number of likely impacts as a result of the downturn in the economy. Fraud, which according to the Association of British Insurers now costs the UK market £1.9bn, is continuing to grow and we expect to see an increase in arson and theft claims. We also predict an overall rise in genuine claims, with businesses less likely to absorb smaller claims," said Aviva's corporate sales director Janice Deakin.

The survey revealed that brokers think flexible underwriting, ratings and premiums are the key ways in which insurers could help them survive the recession.

Statistics source: Impacts of the Recession survey, Aviva, May 2009