Companies take on more physical risk themselves
A recent study highlights a growing trend where companies are retaining rather than transferring physical risk, aiming to enhance resilience and minimize claims, according to Cornelia Meyer von Bremen, chief marketing officer and head of commercial excellence at Belfor Europe. The findings show that 83% of participants feel risk levels have risen in their industry over the past year, with 70% reporting increased organizational spending on risk and insurance.
Business interruption (65%), property damage or fire (64%), and natural catastrophes (57%) topped the list of current concerns. Cyber threats and natural disasters were most commonly linked to evolving insurance terms.
Risk Prevention and Recovery
The data indicates improvements in risk mitigation strategies, likely driven by higher retention rates and increased adoption of captive insurance for physical risks. In response to rising perceived threats, companies are prioritizing asset protection (60%) and reinforcing business continuity plans (40%).
Looking forward, 44% anticipate placing greater emphasis on preventive measures, while 27% plan to boost investments in resilience and recovery initiatives. Despite these efforts, readiness for recovery varies significantly, with business interruption cited most often as having the highest financial cost (33%).
Recovery Readiness Gap
Only 38% of organizations have a fully developed and tested emergency response plan, and just 29% had partnered with external recovery specialists prior to any incident. These figures suggest that while businesses recognize the importance of swift recovery, many still lack robust implementation of such strategies.
Meyer von Bremen interprets the results as evidence that firms are assuming more control over physical risks as traditional risk transfer options become less accessible. She emphasizes that addressing modern business challenges often requires solutions beyond insurance, prompting companies to focus more on resilience and recovery capabilities.
Shift in Risk Management
Nearly half of the surveyed companies have raised their deductibles or self-insured retentions within the past 12 months. Over a third are considering alternative risk transfer tools like captives, and roughly a quarter have opted to accept higher uninsured liabilities. With more risk now appearing on company balance sheets, the function of risk management is expanding beyond procurement of coverage to encompass minimizing losses and enhancing organizational resilience.
