The COVID-19 pandemic, Russia president Vladimir Putin’s invasion of Ukraine and global economic slowdown in quick succession have highlighted the fragility of the world order and the hazards inherent in an increasingly interconnected world, according to findings from a global customer survey published in a new Geneva Association report, “The Value of Insurance in a Changing Risk Landscape”.
Such volatility is expected to persist into the coming decades as geopolitical uncertainties grow, climate risks intensify and technology continues to advance rapidly. These trends are driving up systemic risk, challenging the traditional insurance business model of risk pooling and redistribution and, as what is already being witnessed in some regions with climate risks, making insurance prohibitively expensive or – even worse – unavailable.
The Geneva Association report show 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: over 50% of respondents expect it will become more difficult or impossible to get insurance.
The report said 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 provided 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 Geneva Association socio-economic resilience director 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. 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.” M