In a UK commercial insurance market shaped by centralised underwriting and data-led pricing, Wales offers a quiet challenge. Regulation may be uniform, but exposure is not, and according to Karen Royles (pictured), operations director at FUW Insurance Services Ltd, treating Wales as an extension of England can distort both pricing and perception.
“Fundamentally, in terms of your regulation, it still comes under UK law,” she said. “There is still all the same adherence to guidance and regulatory requirements that stretch across the country. But from a Welsh perspective, it is understanding the difference in the economics.”
The businesses may be smaller, but the risks are not.
Wales is dominated by SMEs and family-run enterprises, but Royles is clear that lower turnover does not mean straightforward exposure.
“The turnover may be just a million pounds, but it is really understanding the complexities. That could still be a really complex business.”
Diversification is now routine, particularly in agriculture. “Very few of our farms now are a pure farming risk,” she said. Tourism and holiday accommodation have become embedded revenue streams. “I do not think it is that they are harder to place, but they are harder to understand.”
Insurers remain willing to write the business, she stresses, but scrutiny has intensified. “They now require a lot more information, particularly on these small, potentially complex risks,” she said.
That places brokers in a translational role. “It is about collecting the data, understanding the business, and then putting that into underwriting language. It is almost like a translation piece.”
Geography introduces another layer of distortion. “We have a lot of coastal communities, valley communities,” Royles said. “Storm on the coast and particularly flooding in both of those communities. It is about understanding the risks on those really small pockets of land.”
Postcodes do not always reflect that nuance. In Wales, a single code can span dense urban areas and remote countryside. “A Swansea postcode will cover the bulk of Carmarthenshire, which is some of our most rural Wales,” she said. “If you look at the postcode alone, you are going, ‘That is in Swansea, so we are going to rate your motor vehicle high.’”
Flood and storm exposure are frequent flashpoints. “They will look at a postcode and say, ‘This is a flood risk area,’ and I am thinking, ‘It is 400 metres on top of the hill.’”
“It is the role of a broker to explain what it really is and ensure that what is true is reflected.”
Agriculture remains central to the Welsh economy and to the Farmers’ Union of Wales, with FUW Insurance Services a wholly owned subsidiary of the farming union. But the nature of risk conversations has shifted.
“With weather volatility it has almost moved from talking about the one big weather event that you need to insure against… to something else completely,” Royles said. “It has not stopped raining here for so long.”
At the same time, post-COVID cost pressures have tightened margins. “Previously, if they lost ten sheep in a flood, they had that buffer and could cope with it. But with costs increasing by 40 or 50%… they have all become a bit more savvy and more aware of potential losses,” she said.
“It has gone from purely, ‘We sell this policy and if that happens, we pay for it,’ to, ‘Let us talk about mitigation, let us talk about risk management.’”
Risk in Wales is also cultural. “In West Wales, very much so,” Royles said, when asked about Welsh representation. “The Welsh language is first language, and I think that shocks a lot of our insurers sometimes.”
Claims can expose operational limits. “You send that to any claims team and they cannot process it,” Royles said of Welsh-language documentation. “But you also cannot translate it, because it has to be the client’s words.”
“I agree it is difficult. I understand why clients are frustrated – they speak Welsh, they communicate in Welsh, and why should they not? But from the insurer’s point of view they are asking how far they can practically go.”
Technology helps, she adds, but not decisively. “AI translations are pretty good these days, but you can lose the nuances of a statement in regards to a claim,” she said. “That nuance is important.”
What emerges is less a story about geography than about mindset. Uniform regulation does not produce uniform risk. Postcodes are imperfect proxies. Smaller turnovers do not mean simpler exposures. And culture can be as commercially relevant as climate.
