Global Insurance Law Connect (GILC)'s third annual risk radar report has identified the important legal, regulatory, and socioeconomic issues facing insurers in each country in which it operates.
According to GILC's 2021 Radar Report, many issues that GILC lawyers reported as currently critical in their markets have converged for the first time – focusing mainly on cyber, climate change, and the impacts of the pandemic bringing new challenges to many markets.
Although Australia has handled the COVID-19 pandemic relatively well from a health and economic perspective, GILC's risk radar report clarified that insurers and their customers have had to be quick to respond to enable business continuity and establish a stable position in the market.
The report identified key issues impacting all Australian businesses – alongside their need to manage flexible and remote working arrangements, supporting the mental health of employees, and competition in the recent war for talent.
The three key areas where GILC sees more focus and concern in the insurance industry include:
“A subsidiary point, but one of much importance to all in our industry, is the follow-on impact of the ‘powering up’ of digital marketing, sales, and claims processing, as insurance buyers around the globe move online permanently after a year of cultural change,” said GILC chairman Jim Sherwood.
“In this environment, it is all the more important that different markets share approaches, regulatory challenges, and stories of innovation.”
Gillian Davidson, partner commercial insurance at Sparke Helmore and GILC board representative for Asia Pacific, said the global issues of cyber and the impact of the pandemic resonate in Australia.
“Insurers and their customers have had to be quick to respond to enable business continuity and establish a stable position in the market,” Davidson continued. “With advances in technology comes the potential for a disruptive threat landscape, characterised by significant privacy and cyber risks. As regulators step up scrutiny on privacy and cyber-security-related issues, insurers find themselves facing increased compliance as well as cyber claim costs.
Business interruption (BI) losses and the uncertainty around whether policies cover pandemic-related losses continue to be an issue in the industry, Davidson said.
“The insurance industry recognises the importance of seeking clarity on the interpretation of further aspects of business interruption policies and is working with stakeholders and policyholders to provide resolution as quickly as possible,” he added.
“What has transpired as a result of the pandemic will potentially cause insurers to rethink their risk appetite, underwriting principles, and policy wording construction with resultant long-term impacts across the market.”
