A group of senior risk managers and insurance buyers have threatened to leave traditional insurance markets if the available coverage does not adapt to reflect changes in how businesses operate.

Carriers and buyers from the international insurance markets gathered in London this week for a roundtable discussion – ‘Insuring the Unknown Risk’ - hosted by Russell Group.

Participants discussed the availability of insurance products available from the market, with all risk managers present consenting that cover available does not meet the needs of modern corporates.

“Around 80 percent of most corporates’ risks are uninsurable – it’s been a bug bare of mine for years,” one senior risk manager said.

“The insurance market doesn’t seem capable of filling that void – either the cover they offer is far too expensive or they can’t model the risk,” they went on.

“We are left hanging.”

Risk managers at the roundtable said that with the products available from traditional (re)insurers not providing adequate cover for their risk profiles, many were beginning to explore purchasing protection from alternative markets.

“As buyers we have a choice of where we ultimately buy our protection from,” one said.

The insurance buyer said that with the majority of carriers not familiar with their company’s exposures, (re)insurers are not capable of providing the additional services that risk managers would expect when taking out a policy.

As a result, insurance is increasingly being whittled down to a single transaction, rather than the relationship-based exchange of years gone by.

“When I go to a reinsurer, am I just buying their capital?” one person questioned.

Another said that to this backdrop, the low cost of insurance in the sustained soft market was the only thing stopping them purchasing cover from alternative markets.

“If the price of cover is too much, I’ll go somewhere else to purchase that protection – I’ll go to the capital markets,” they said.

“If rates go up, we’ll go elsewhere.”

Another participant urged carriers, brokers and insurance buyers to work together to create products that are “fit for purpose” or face losing business to alternative markets forever .

In addition, they said that (re)insurers must act sooner rather than later in creating new forms of cover. If they don’t, the buyers warned carriers may be beaten to the post by disruptors from outside the industry.

“Someone has to take the risk, someone has to be first,” one said.

“We have to go back to basics - If we don’t, someone else will.”

Underwriters present at the roundtable said that while they acknowledged the need for insurance coverage to evolve in line with the changes taking place at corporate firms, there were many hurdles in achieving it.

One argued that pressure from the board to deliver solid returns to shareholders was prohibiting carriers making the necessary investments in new products.

“A lot of (re)insurance companies are focused on the value for the shareholder and return on investment,” they said.

“They’re therefore not willing take a risk and explore new solutions – it stifles innovation,” they added.

Another factor raised by underwriters present was regulatory requirements, with one highlighting that the solvency regime makes developing new products “much more difficult” than it was a decade ago.

“You have to hold capital and explain to regulators why you are setting prices at a certain rate,” they said.