There has been much made on the Insurance industry’s need to evolve recently, from Anthony Hilton’s article ‘Insurance will have to change its ways or die’ in the Evening Standard to the recent seminar held at Lloyd’s on the changes of Connected Risks. Whilst the scale of the issue is widely debated, it seems to be universally agreed that the Insurance industry needs to evolve to keep up with clients’ needs.
Insurers need to ensure that their offerings remain relevant as their client’s needs change. Historically, insurance in the simplest terms provided a monetary pay-out to put clients back in their original position. As businesses have grown more complicated and markets inter-connected, insurers need to consider how they can best serve their clients’ needs.
This may be helping to reduce client’s exposure to risk before loss, through risk control services, or supporting clients following a loss with remediation services. Particularly where reputational damage is possible, for example in the case of poorly managed Cyber hacks, mitigation both pre- and post-loss is going to be more effective in helping companies regain the trust of their customers.
But it is not just the breadth of services offered that insurers need to expand; insurers also need to evolve their package products in order to better support their clients’ needs, particularly for small to medium sized businesses. We have noticed that in recent years there has been an increase in the take-up of package insurance, as this covers clients’ better and ensures they have insurance products better tailored to their needs. These packages will likely continue to increase in popularity, and insurers will need to make sure the coverage of packages keeps up with the needs of the insured.
Better understanding of risk connectivity is needed to provide clients with good cover and develop products that respond to the risks they face as much as possible. Recognising that we needed to understand our clients’ needs more fully, in our Risk and Confidence Survey we asked business leaders to identify the key risks facing their organisations so we can better support them in the future. We identified the following as areas we will develop to better support our clients:
- Technology and Cyber risk: Whilst only 16% of business leaders saw this as the top risk facing their business it is predicted to increase. This is definitely a developing though not yet fully understood risk, which is why we are concentrating on growing our technology and cyber offerings, and ensuring we can support our clients as developments continue in this field.
- Boardroom risk: 46% of business leaders predicted that boardroom risk – defined as fraud, corruption, poor governance, weak compliance or pension exposure – would increase. Whilst not all boardroom risk can be insured, insurers need to work with clients to better assist them by insuring the parts that can be and providing support mitigating those that can’t.
Anthony Williams, Chief Risk Officer
Download your copy of the CNA Hardy Risk and Confidence Survey at www.cnahardy.com/pulse