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Most professionals in the insurance industry are accustomed to a challenge or two – however, it seems the current environment is a particularly hostile one, as timeless issues are being compounded by more modern problems.
Speaking to Insurance Business, three senior figures shared the topics they expect to test the industry over the coming year – and concerns ranged from more traditional themes like trust and relevance to 21st century challenges such as tech and cyber.
“The biggest challenge will be understanding that in an ever-developing, technologically-driven world, risks are taking on new shapes and more complicated forms,” he said.
“For example, automotive vehicles are safer, and yet auto rates will continue to rise because of how expensive new vehicle accidents are due to the advanced technology contained within the car.”
Continuing the theme of advanced technology, Gallagher also warned that more industries and areas would be exposed to the risks associated with cyber.
“In a data collection environment enabled by evolving technologies, cyber risks continue to rise, making cyber insurance more paramount,” he said.
Troy Filipcevic, founder and MD of Emergence Insurance, also pointed to a cyber-related issue as a pressing concern for the industry – saying improved education was of the utmost importance.
“One of the biggest challenges is helping the market understand the business risks associated with cyberattacks,” he told Insurance Business.
“We as an industry need to be more effective in communicating what that means to clients – the vast majority of the market still thinks that a cyber event won’t happen to them because they are immune, too small, in the wrong industry, etc.”
Filipcevic’s comments ring true and countless studies have warned about the susceptibility of small businesses to cyberattacks.
In fact, one report by cyber security firm Norton found that over half a million of Australia’s small businesses fell victim to cyber crime in 2017, while a second study showed medium sized businesses could expect to pay out an average of $1.9 million if they were hit by a cyberattack.
“We have seen firsthand the devastating impact a cyber event can have on a business,” said Filipcevic. “We need to educate them that a focus on cybersecurity, coupled with a risk transfer solution, can greatly benefit their business.”
Mark Searles, outgoing CEO and MD of AUB, agreed that technology posed a significant challenge, but he also warned that those in the industry couldn’t afford to ignore more timeless issues – such as trust and relevance.
“Trust and relevance are particularly important in an environment where the Royal Commission has rocked the wider industry and technology and client needs are changing rapidly,” he said. “More than ever, insurance providers and brokers must actively work to maintain their relevance to customers and predict and adapt to evolving needs.”
While the banks remained the core focus of the Royal Commission, general insurance did not escape scrutiny and the entire financial services industry is now being held to higher standards as a result.
“We believe the answer to both of these factors lies in the ability to offer a holistic risk solution – becoming a trusted risk advisor to clients,” said Searles. “This shift to a professional consulting-style client relationship is key to continuing to meet client needs, and that’s why our strategy is to offer total risk solutions.”
