Credit ratings no longer the main tool for corporate insurance buyers to test insurers’ financial strength: survey

Insurer security remains a top priority for corporate buyers a year and a half after the peak of the financial crisis, Lloyd’s of London reports.
The crisis has left a lasting impression on buying behaviour, despite the fact that insurance made it out relatively unscathed, according to a survey by the Association of Risk and Insurance Managers (AIRMIC), Lloyds says.
Fears of insurer failure are no longer keeping members awake at night, but buyers are continuing to scrutinize their insurance counterparties, AIRMIC chief executive John Hurrell told Lloyds. “They’re actively intervening to ensure that their practices are a little bit more robust on insurer selection than perhaps they had been a couple of years earlier.”
The survey of 81 buyers found that corporate buyers are still using credit ratings as an important indicator of insurer strength, but increasingly they are using other methods of assessment as well.
“Over a third of buyers said external ratings were their top source of information on insurer security,” according to Lloyds. “However, 28% use brokers and other third-party sources as their top source and 23% rely on their own evaluation.”
While counterparty strength dictates how much business a buyer might place with an insurer, price did not play a large role, the survey found.
One-third of the respondents said ratings affected the volume of business placed with an insurer between 91% and 100% of the time.
However, only 4% said ratings affected the price of business placed with them between 91% and 100% of the time, Lloyds said.