By Can we review risk and insurance responses across the risk landscape, as they are encountered by organisations operating in specific business sectors, rather than by insurers' lines or classes of business?
Insurance is often viewed as a low priority on the corporate agenda, as an insurance response is considered secondary to being able to continue to provide service, wherein lies the ultimate brand value. Unfortunately many insurance products do not provide sufficient cover for the critical exposures identified on the corporate risk matrix.
Many companies buy insurance correctly but quite grudgingly, often purely to comply with good governance, and would certainly not favour a big increase in insurance expenditure.
Advances in the way Communication, Technology and Media (CTM) companies do business have, in many areas, outstripped development in insurance products. Hence the use of insurance is often seen as a non-strategic purchase and its use is likely to diminish if products are not developed to meet new needs.
Rather than start again with a blank sheet of paper, is it not possible to redesign and amend current insurance products? In particular is there a real opportunity to develop Material Damage/Business Interruption (MD/BI) wordings in particular the definition of assets, into Non-Damage/Business Interruption (ND/BI)? Although if this is to be achieved then the insurers' traditional surveyors' model has to be updated and made fit for the new exposures being covered.
Supplier risks are fundamental to the model and the development of suitable suppliers' extensions is critical. The insurance market must make better efforts to assess and provide coverage for this element.
Insurers are conservative in their approach and can sometimes lack real industry expertise. However, the unique advantage that Insurers have is holding large quantities of data on legal cases and claims settlements. They are perhaps missing the opportunity to provide clients with additional services such as outsourced due diligence capability, providing valuable legal and claims data and offering expert claims services.
Systems resilience is a massive issue and cyber insurance products need to be properly developed, providing much higher limits and shorter waiting periods if they are to be attractive.
It is essential that the insurance market listens to the needs articulated by the buyers. This is a topic that will be addressed in our upcoming Emerging Risks event where we'll be joined by a number of insurers to discuss and debate these issues further. To find out more about this event, please visit:
See: http://www.jltgroup.com/risk-and-insurance/events/emerging-risks-event-october-2011
