Policyholders are increasingly concerned that their insurance coverage has become insufficient for emerging risks from cybersecurity to environmental threats, according to the World Insurance Report 2019 published by Capgemini and Efma.
The report identified five macro trends — disruptive environmental patterns, technological advancements, evolving social and demographic trends, new medical and health concerns, and business environment changes — that are creating emerging risks for insurance customers and their businesses. Yet, most insurers have been slow to respond to these trends and equip customers for them, stated the report, which studied 28 markets, including India.
Under 25% of business customers across all geographies, and less than 15% of personal policyholders, feel they have sufficient coverage to insure against any one of the emerging risks driven by these macro trends. Fewer than 40% of life and health insurers said they have built a pipeline of new products to cover emerging risks comprehensively.
As per the report, 83% of personal insurance customers have medium or high exposure to cyberattacks and to outliving their savings, yet just 3% and 5% respectively are comprehensively covered against these eventualities.
Staff healthcare cost
Among business customers, 81% are exposed to escalating employee healthcare costs against which just 17% are well covered; 87% are at risk of cyberattacks with less than 18% comprehensively insured; and almost 75% are threatened by rising natural catastrophes, for which just 22% are effectively covered, found the study.
The report further said, as the insurance landscape shifts, customers were showing greater readiness for change than their insurance providers.
Over half (55%) of customers said they are ready to explore new insurance models, but barely a quarter (26%) of insurers are investing in them.
While 37% of customers said they are highly willing to share additional data in return for improved risk control and prevention services, only 27% of insurers have the capability to tap real-time data for risk modelling purposes.
Risk assessment capabilities can be significantly enhanced through deployment of machine learning, artificial intelligence and advanced analytics, and effective collaboration with tech providers. However, progress in these areas has been mixed: a majority (57%) have leveraged AI, machine learning and advanced analytics, but only 29% have implemented automated risk assessment, and just 20% real-time insight generation from IoT devices, it explained.
Anirban Bose, CEO, financial services, Capgemini and member of the group executive board said, “Technological progress also needs to be matched by a shift in attitudes.Where insurers have traditionally seen themselves as a payer, they need to evolve into the parallel roles of partner and preventer, working more closely with customers to mitigate risks and provide on-demand services.”
The report covered all the three broad insurance segments: life, non-life, and health insurance and gathered insights from 28 global markets including India.