4 November 2014
If you’re following the right people on twitter, you’ll know that Towers Watson’s #ERMForum took place in the Netherlands in early October. As ever, guest speaker Dr. Pippa Malmgren got to the crux of current insurance debate with her Thought of the Day for TW’s audience of insurance Chief Risk Officers:
How much time are you spending on the big picture risks?
Very little, it seems. Aon Consultants reportedly lamented last month that insurers are opening themselves (and the world) up to imminent liability by failing to mitigate against global, unprecedented disasters. Instead of acknowledging that new risks such as cybersecurity and hyper-connectivity are desperately in need of insurance innovation*, insurers predominantly continue to focus on smaller risks, such as health and vehicle insurance. This, Aon explains, is because there is a wealth of data and experience available to inform decisions relating to these risks.
But perhaps a more pertinent threat – and one related to product provision – is that posed by ‘local markets’ within the global insurance market. While global insurers like Lloyd’s rode to well publicised success from demand for insurance in faster-growing regions in the past, insurance coverage is increasingly being provided by local insurers and alternative insurance hubs.
As indicated by recent statements by Leapfrog’s founder Andrew Kuper, insurance industries in emerging markets are developing rapidly. How long is it before the competition will reduce the need for brokers to source coverage from London? Signs have already begun, with Catlin opening its Singapore branch to underwrite insurance and reinsurance in the Asia-Pacific region in January 2014.
Recognising this threat, Vision 2025 was launched by Lloyd’s to keep pace with the emerging markets. By proactively developing products in emerging risks, Lloyd’s could confront future competition by making London more relevant – a timely endeavour.
*The notable exception to this – Tom Ridge’s specialist cyber insurance company – was also announced as launching last month by the FT.