Innovate or die, insurers told
The sustainability of the risk insurance market will depend on product innovation, as new risks and continuing pressure to cut premiums threaten to stifle traditional insurers, according to Aon.
With persevering interest from international markets in alternative investments, insurers should be using profits to innovate, rather than “banking the difference, Aon Risk Solutions Australia CEO Lambros Lambrou said.
He said success for the insurance industry lies in the ability to predict future risks and develop products to meet changing markets.
The previous uninsurable cyber risk was cited as an example of how the market has risen to meet the challenge recently.
“Five years ago organisations were completely exposed to cyber risk. The insurance market just did not cater to this very real and constantly evolving risk,” he said.
“Now the market offers specialist cyber risk insurance policies to adequately mitigate risk.”
Lambrou said despite commentary to the contrary, the domestic insurance market is in relatively good shape at a macro level, with fewer attrition losses and natural disasters.
However, the landscape has been challenging for insurers with bushfire and offshore energy exposures, as well as workers compensation insurers.
“Both the volume and the value of Workers Compensation claims are on the increase,” he said.
“This means that clients with poor loss histories will inevitably be asked to take on more risk themselves.”
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