London – 3 October 2005 – Half of all European multinationals surveyed want greater cover from their property insurers, particularly in relation to business interruption, and would be prepared to trade premium rate reductions in return. Aon’s survey* ‘2005 European Property, Liability and D&O Report’, also found that the trend towards self-insurance continues to grow at pace with a third of all captive formations in Europe coming in the last two years.

Correspondingly, insurers are willing to meet the demand for greater business interruption cover, with 72% of those surveyed saying they would consider broadening the cover offered if buyers were to forego rate reductions. There are strings attached however particularly with insurers largely focused on maintaining their levels of profitability.

Despite the survey results coming before the onset of this year’s hurricane season, many of the European buyers’ attitudes are unlikely to shift and may be further cemented if they perceive a knee jerk reaction towards rate rises from their insurers in the aftermath of Hurricane Katrina.

Commenting on the results, Nick Maher, chairman of Aon’s Global Property Practice Group, said: “Although we conducted this survey before this year’s hurricane season, I would still expect European buyers to have much the same attitude towards the product they’re buying. Give us better value and meet our risk needs or we’re seriously going to consider self-insuring even more is the message that comes through loud and clear. Business interruption particularly in view of an increasing dependence on third party suppliers is really becoming an issue and price is not the number one priority right now.”

Specifically focusing on the likely impact of the 2005 hurricane season on the European corporate insurance buyer, Oliver Schofield, director of Aon’s Global Property Practice said: “Although we live in a global village, European buyers will almost certainly baulk at having to pay higher premiums to meet insurers’ hurricane losses in the US. Corporates with multi-national insurance programmes may also find local offices wanting to go it alone if they can get a better deal from regional insurers who, unaffected by hurricane losses, may not raise their rates.  We certainly do not expect the potential reinsurance market rate increases to be passed on wholesale by insurers to European corporate buyers and indeed, we expect buyers to be able to exercise their choice between rate reductions and broader coverage.”

The survey also found that:

• The benefits of providing more detailed risk information had significantly helped the buyers’ cause, with 70% saying they had obtained additional capacity and seen lower rates as a result.
• The continental European and London markets continue to maintain a clear lead in terms of capacity provision to European buyers, but 25% of underwriters believe that Bermuda is now a major source of capacity for European domiciled markets.

*Copies of the full Aon survey, ‘2005 European Property, Liability and D&O Report – The Dynamics of Choice’ and a copy of the latest update supplement, will be available from 3 October. Please email sally.taylor@aon.co.uk for a copy, or see the related links box on the right of this page.

Notes to editors