The fragility of our world order and the hazards inherent in an increasingly interconnected world have been highlighted by events such as the COVID-19 pandemic, President Putin's invasion of Ukraine and global economic slowdown in the recent years.
A survey which is part of a new report by Geneva Association shows that customers across the world’s six largest insurance markets (the US, China, Japan, UK, France and Germany) are concerned about future insurability – particularly for natural catastrophes, longevity and cyber risk. The survey found that over 50% of respondents expect it will become more difficult or impossible to get insurance. The new report The Value of Insurance in a Changing Risk Landscape says the existing volatility is expected to persist into the coming decades as geopolitical uncertainties grow, climate risks intensify and technology continues to advance rapidly.
It says these trends are driving up systemic risk, challenging the traditional insurance business model of risk pooling and redistribution and, as we are already witnessing in some regions with climate risks, making insurance prohibitively expensive or – even worse – unavailable.
The report advises that by providing services that go beyond traditional risk transfer – such as risk prevention services – and collaborating with governments to address the most severe risks, insurers can continue to safeguard societies in the face of a more complex and challenging risk landscape.
The survey findings provide strong support for these approaches, with more than 80% of customers expressing interest in non-traditional risk services.
The Geneva Association managing director Jad Ariss said, “The increasing intensity and impact of risks today, from climate to cyber, are creating testing conditions for insurers. Yet the case for the continued value of insurance is clear. By leveraging their expertise to offer services that help to mitigate risk and drive positive change among their customers, insurers can maintain, and even strengthen, their societal relevance.”
The GA director socio economic resilience and author of the report Kai-Uwe Schanz said, “Our theoretical analysis found that climate and cyber risks in particular present major obstacles to insurability. Interestingly, they were also two of the top risks cited by customers when it comes to concerns around the unavailability and unaffordability of insurance.
He said, “Encouragingly, our survey results also reveal considerable appetite among customers for additional risk services – such as prediction and prevention services – indicating a clear opportunity for insurers to expand their offerings.”
Source: asiainsurancereview.com