View this article online: https://www.insurancejournal.com/news/international/2015/09/21/382218.htm
Aon Benfield has identified seven emerging risks that present re/insurers with business opportunities over the next five to 10 years, which the announcement listed as “US mortgage credit, the sharing economy, reputation and brand, micro insurance, corporate liability covers, terrorism cover and cyber risk.”
They will be formally presented and described by Stephen Mildenhall, CEO of Aon Analytics, at Aon Benfield’s 14th Biennial Hazards Conference in Australia on September 22nd. The bulletin also noted that he will “describe how a history of successful risk management has dampened demand for existing risk products, amid in road fatalities, property fires and medical professional liability payments in many countries over the past decade.”
That situation contrasts with the opportunities presented by the developments in the global economy, which presents the re/insurance industry with “new areas of emerging risks.” A number of those are identiļ¬ed by the Aon’s “Global Insurance Market Opportunities, “report, which includes “exposures that are intangible, yet nonetheless can have a considerable impact on balance sheets, income statements and shareholder value.
Aon described the seven key emerging risks as follows:
1. U.S. mortgage credit: Freddie Mac and Fannie Mae are transferring U.S. mortgage market risk in a series of reinsurance transactions, with the potential demand for $6 billion of reinsurance limit annually.
2. Sharing economy: with individuals renting out personal assets for money in direct competition with established businesses like hotels and taxis, coverage gaps highlight an immediate opportunity for re/insurers to offer policies which span personal and commercial exposures.
3. Reputation and brand: the #1 risk identified by the 2015 Aon Global Risk Management Survey.
4. Micro insurance: offering access to four billion potential new customers, and with opportunities for long-term growth as developing economies gradually become more affluent.
5. Corporate liability: opportunities for re/insurers to provide cover for giga losses, which require more than $1 billion of reinsurance limit.
6. Terrorism: leveraging military-based technology to better understand this risk and improve model competencies, such as accounting for factors that mitigate blast zone damage.
7. Cyber risk: as data and analytics improve, Aon forecasts that cyber risk will move from complex and undermanaged into the insurance mainstream, where markets can adequately price and transfer risk.
Mildenhall explained: “Risk owners are demanding new solutions for these emerging risks as they work to grow their businesses. This in turn represents opportunities for international insurers to grow through increasing the relevance of their insurance products. By investing in data and analytics, insurers will be able to grasp the potential around growth, geographic expansion and market feasibility.”
Source: Aon Benfield