Insurance sector must ‘stay curious and think ahead’ to cope with emerging risks, rather than simply passing the buck to other industries
The World Economic Forum (WEF) meets in Davos, Switzerland this week (January 2023) and – as it has done for the past 18 years - the meeting was preceded by the release of the WEF’s Global risks report on 11 January 2023, which examines current and future risks.
The report noted that climate change, natural perils and the failure to adapt to the ramifications of these events will be key issues in the next decade.
Contemplating the report’s findings, one insurance expert believes that the industry’s responsibility to tackle emerging risks should be assumed by the many, rather than the few.
Catherine Dixon, chief underwriting officer at Allianz Insurance, said: “We have to recognise that insurance is intertwined with every part of society.
“Emerging risks will affect us all and, as such, it should not be something that other people do somewhere else.
“We have to understand what [emerging risks] mean for the industry and our clients. We need to stay curious and think ahead. That is everybody’s job - it should not be left to someone else.”
A longer-term view required
Dixon said that the challenges facing the insurance industry in 2023 means it must look at new risks using a longer-term lens.
For example, inflation remains a major concern.
Rising inflation has presented the insurance market with the challenge of ensuring that clients understand the implications - the biggest of which being that they have adequate insurance in place to meet rising material and claims costs.
There is also the continued threat of legislation and litigation.
Many of the legal appeals around business interruption insurance disputes linked to Covid-19 are set to be decided in 2023. These have the potential to further damage the insurance market’s reputation and trust in the eyes of the customer.
A situation where businesses find that inflation has left their policy limits inadequate will do little to rebuild trust.
Talent will be also key in 2023 according to Dixon.
She said: “I am concerned about the talent that is leaving the industry.
“Experience will be vital - both now and in the future - but as risks change, we will need to bring in talented individuals with new skills that provide new approaches.
“If we are to meet the emerging risks of the future, [the industry] will need to have the expertise to understand how insurance works [to] use what has happened in the past to better understand what will happen in the future.”
The key here will be cooperation.
Dixon believes the risks that the world - and insurance industry - face are such that the market cannot work in silos.
Instead, it needs to bring together experts from across the world and different insurance disciplines to create propositions that will provide the products and cover demanded by customers.