Insurance and risk managers will need to work together to create a new business model, if they are to retain value and relevance to business, according to analysis from Airmic, AXA Corporate Solutions, Chubb and JLT Specialty.
Against a backdrop of disruptive innovation driven by technological advances, globalisation, and evolving corporate demands, conventional insurance models that are geared towards protecting physical assets are under threat.
Speaking at a panel at the Airmic Conference 2017, incoming CEO John Ludlow argued that traditional lines of insurance have become quite commoditised, and products need to be bespoke to coincide with the differentiation found in newer lines.
“The insurance market is responding to what is clearly a demand. They are making sure their products are fit for purpose,” added outgoing CEO John Hurrell.
Growth of intangible assets is outpacing that of tangible assets, and a majority of risk managers revealed they plan to manager intangible risks in-house, by either reducing or retaining them, according to an Airmic survey.
As part of the research, AXA Corporate Solutions suggested that the industry must move away from a transaction-driven model towards a collaborative model where insurers and brokers work with risk managers to improve the understanding, prevention and mitigation of today’s risks.
Furthermore, AXA suggested this should coincide with more value-added and advisory services, such as legal and media support.
Chubb argued that digital advancement and emerging technologies are key areas where insurers and risk managers should work together.
Airmic members perceived the disruption of emerging technologies are the fastest growing risk, and research revealed a clear demand for greater support in terms of insurance and value-added serices.
In order for insurance to retain its relevance, JLT suggested the market must work collaboratively to ensure business executives understand its strategic value.
JLT Specialty said the industry is often viewed as a price-driven transaction, with 39 percent of Airmic members struggling to articulate the value of insurance to their business.
Julia Graham, deputy CEO of Airmic, said: “The insurance industry recognises that traditional insurance is losing relevance in face of today’s more complex and harder-to-define risks.
“And yet our members want support in understanding and dealing with these modern risks – both in terms of innovative products, but also in terms of broader support. The insurance industry must provide more than just risk transfer; this requires a shift in thinking but everyone will benefit.”
Airmic 2017, Risk management, Insurance, AXA Corporate Solutions, Chubb, JLT Specialty, John Ludlow, John Hurrell, Julia Graham, Airmic, UK