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1、22/03/2022INDEPENDEN T P U B L I C AT I O N BY#0793R AC O N T EU R.NE TFUTURE OFINSURANCELOOKING TO A POST-COVID LANDSCAPE TOP FIVE INSURTECH TRENDS TO WATCH0603INSURERS REACT TO CLIMATE CHANGE12R A C O N T E U R.N E TF U T U R E O F I N S U R A N C E0302R A C O N T E U R.N E T03/future-insurance-20

2、22he pandemics effect on the insurance industry has been severe,unfold-ing at a time when insurers were already facing significant changes owing to Brexit.And while much of the impact was immediate and predictable,Covids longer-term consequences are worrying insurers.According to Edward Rushton,head

3、 of insurance and reinsurance at LexisNexis UK,business interrup-tion has caused the most headaches.He says claims will continue to be litigated and arbitrated as courts and ombudsmen work through a backlog of cases.“Beyond the direct claims are reinsurance claims.This is going to get really complic

4、ated and I expect Covid-19 reinsurance issues to be the subject of disputes throughout 2022 and quite possibly into the next decade.”Covid triggered a spike in the num-ber of policyholders claiming on their cover,the costs insurers had to fork out and the volume of disputed claims.The Financial Ombu

5、dsman Service said it received 90,000 more complaints than it expected to dur-ing the pandemic.Insurance broker Howden puts the insured losses so far from Covid-19 at$44bn(33bn),representing the third largest cost to insurers of any catastrophe,behind Hurricane Kat-rina and the 9/11 attacks.As well

6、as navigating disputes,insurers have had to quickly adapt to the rise of remote working.Digital transformation projects have been accelerated,with more money invested in technology and soft-ware.“Digital platforms have helped firms to cope,and we expect more digitisation to come;this is some-thing t

7、he insurance industry has not always been at the forefront of,”notes Scott Eason,head of insur-ance at professional services consul-tancy Barnett Waddingham.Remote working and digitalisation have also led to an uptick in cyber risk and ransomware attacks,lead-ing to more expensive and restric-tive c

8、yber insurance.The cost of cover rose 92%in the UK last year compared with the same period in 2020,according to the insurance broker Marsh.Rushton adds:“Pro-fessional indemnity lines may also feel a lasting impact as hybrid or home working becomes more com-mon,since the risk profile is signifi-cantl

9、y different to a predominantly office-based organisation.”Business interruption cover has been one of the most frequently lit-igated aspects of the pandemic to date.“We have seen a number of judgements across the globe where courts have ruled in favour of busi-ness interruption policyholders against

10、 insurers,”says Eason.“This has generally resulted in an increase in the cost of insurance through higher premiums.”An FCA test case in the Supreme Court last year resolved some key contractual uncertainties and ordered six insurers to pay out for business losses resulting from Covid-19.As a result,

11、many busi-ness interruption products have since been withdrawn or curtailed.Hiscox,one of the insurers in the case,has added pandemic exclusions to its business interruption policies.Insurers claim it is not possible to insure against a pandemic because it poses a systemic risk.Despite the calls for

12、 a government-backed rein-surance scheme to resolve this(just as Pool Re and Flood Re have done with terrorism and flood risks respectively),sources say it is unlikely to be set up any time soon.“The availability of pandemic cover in future may be very limited unless such a public/private part-nersh

13、ip is forged,”notes Rushton.The FCAs test case did not resolve all the issues in policy wording,however,and disputes over busi-ness interruption continue to rage.Last month restauraunt company Corbin&King,owner of London restaurant,the Wolseley,won a case against Axa.This win allowed the company to

14、claim separately for each of its premises and for each mandatory closure,rather than claiming for a single loss for all of its premises combined.“This is seen as a big win for poli-cyholders and will likely result in insurers settling outstanding claims for much greater sums than they would have oth

15、erwise,”says LexisNexiss Rushton.Major reinsurers have had large Covid-related losses since the start of the pandemic.“Excess mortality is an ongoing concern for life rein-surers,”notes Eason.“On the non-life side,business interruption is a concern where we still do not know the true extent of losse

16、s.”While losses are reducing part-ly due to higher renewal rates and more restrictive cover it could take years for the impact on rein-surers to materialise fully.Rushton explains:“Reinsurers may be entitled to reopen questions as to whether the original insured loss was properly settled.This adds p

17、ressure on reinsureds including direct insurers to be more strin-gent in their claims handling,which fuels potential disputes at the direct level.”He says it is becoming more costly for insurers to use reinsurance to protect themselves against future mass claims,especially those aris-ing from any pa

18、ndemic.“If the cost of appropriate reinsurance is too high,direct insurers will be reluc-tant to incur inwards liability and,in some cases,may withdraw prod-ucts from the market.”As focus on the pandemic recedes,other issues are coming to the fore.“Insurtech”will continue to be a big trend in the po

19、st-pandemic world.According to Rushton,insurers and brokers will increas-ingly look to acquire start-ups to keep pace with innovations in underwriting and claims han-dling,such as pay per drive insur-ance or parametric crop insurance.The use of artificial intelligence in underwriting will likely bec

20、ome considerably more widespread.Meanwhile,insurers must brace themselves for further claims resulting from the Covid-19 pan-demic;as already seen in the US,there could be more to come from marine liability and demurrage.Finally,repairing reputational damage will be a key focus for those in the insu

21、rance industry.“Rightly or wrongly,insurers are facing rep-utational risk due to alleged non-payment of valid claims,”Eason says.“This boils down to a mismatch in expectation between what insureds thought they were covered for versus what their actual insurance was meant to do.”Insurance assesses it

22、s post-pandemic futureFUTURE OF INSURANCEraconteur/raconteur_londonFrom business interruption disputes and rising reinsurance costs to dealing with reputational damage,Covid has had a profound effect on the industry.What lies ahead?Distributed inRuth Emery Published in association withAlthough this

23、publication is funded through advertising and sponsorship,all editorial is without bias and sponsored features are clearly labelled.For an upcoming schedule,partnership inquiries or feedback,please call+44(0)20 3877 3800 or email Raconteur is a leading publisher of special-interest content and resea

24、rch.Its publications and articles cover a wide range of topics,including business,finance,sustainability,healthcare,lifestyle and technology.Raconteur special reports are published exclusively in The Times and The Sunday Times as well as online at The information contained in this publication has be

25、en obtained from sources the Proprietors believe to be correct.However,no legal liability can be accepted for any errors.No part of this publication may be reproduced without the prior consent of the Publisher.Raconteur M Yiu Yu Hoi via GettyImages90,00010.8%Reuters,2022Financial Ombudsman Service,2

26、022average rise in global property catastrophe reinsurance rates this yearmore cases than the Financial Ombudsman expected since the outbreak of Covid have led to long waiting times$44bnin insured losses from Covid-19,the third largest cost to insurers of any catastrophe,behind Hurricane Katrina and

27、 the 9/11 attacksO U T L O O KPeter ArcherBestselling author and experienced journalist,he is a former staffer on the Press Association national news agency and was a consultant for NBC in America.Fiona BondFreelance journalist covering all areas of finance and investing including personal finance,s

28、he is the former commodities editor at Interactive Investor.Ruth EmeryA financial journalist for 15 years,she recently launched Times Money Mentor and prior to that was deputy Money editor at The Sunday Times.Oliver PickupMulti-award-winning journalist specialising in business,technology,sport and c

29、ulture.Chris Stokel-WalkerTechnology and culture journalist and author,with bylines in The New York Times,The Guardian and Wired.Jonathan WeinbergFreelance journalist,specialising in technology,business,social impact and the future of work.Alex WrightBusiness and financial journalist with more than

30、20 years experience,having worked on international,national,regional and local papers,and trade and consumer magazines.ContributorsPublishing manager Ben KeastDesign/production assistant Louis NassDesignKellie JerrardCelina LuceyColm McDermottSean Wyatt-LivesleyDesign directorTim WhitlockIllustratio

31、nSara GelfgrenSamuele MottaDeputy editorFrancesca CassidyManaging editorSarah VizardSub-editorsNeil ColeGerrard CowanReports editorIan DeeringHead of productionJustyna OConnellTR A C O N T E U R.N E TF U T U R E O F I N S U R A N C E0504The practice of charging loyal customers higher prices than new

32、 customers has blighted the insurance industry for years.But will a ban see prices rise for all customers?And how can insurers restore trust?Indeed,the rising cost of motor repairs and parts,building materials and labour is placing pressure on pre-miums,with the average amount paid for damage repair

33、 to policy-hold-ers vehicles rising by 59%between 2015 and 2020,according to the ABI.According to Houseago,the changes will likely have a bigger effect on insurers with larger back books and longer tenure customers than on those with smaller back books.The rules also pave the way for new players and

34、 new insurance offerings to enter the market over the next 12 months.The ban on price walking inevitably raises the question of whether further regulatory intervention is likely.For Houseago,avoiding further FCA scrutiny will require insurers to be compliant not simply with the new rules,but the FCA

35、s overall fair value principle,which is designed to ensure insurance providers are focused on driving the best customer outcomes through enhanced product governance.Houseago explains:“One way providers can begin to demonstrate their commitment to championing customers is to start an open and transpa

36、rent dialogue about the changes and why theyre happen-ing.Weve seen a small number of brands do this effectively through their customer communications since the beginning of the year,but this is not as common practice as we would have hoped at this point.”One project has seen the ABI,together with i

37、nsurance firms Aviva,Direct Line Group,Royal London,RSA and Standard Life,join forces with Plain Numbers to help people who struggle with numeracy to better understand cus-tomer communications,in an effort to build trust and generate better consumer outcomes.Phil Jeynes,director of corporate strateg

38、y at insurance broker Reas-sured,says the key to building con-sumer trust is transparency throughout the underwriting pro-cess and clear communication about what the customer can expect in return for premiums.“Too often this gets muddied by a tendency within the industry to worry about nuances in th

39、e sales process which are largely irrele-vant to the end consumer what they care about is clarity and value,”he says.“By sticking to these core princi-ples,consumer trust will follow and it wont be necessary for the regulator to implement further legislative change.”insurance market,with new custom-

40、ers tending to pay 130 versus the 238 price tag for loyal customers.The radical move by the FCA to end this imbalance is expected to save consumers more than 4bn in insur-ance premiums over the next 10 years.Yet critics have raised con-cerns that the new regulation will see both existing and new cus

41、tomers face higher premiums as insurers seek to balance sales with margins.he Financial Conduct Authoritys crackdown on the practice of price walk-ing also known as the loyalty pen-alty promises to create a fairer industry by saving consumers bil-lions of pounds.But questions remain over its long-te

42、rm impact.On 1 January,the watchdog intro-duced new rules banning car and home insurers from quoting loyal customers a higher price for renew-ing their policy than they would pay if they were a new customer.While price differences between new and existing customers is a fea-ture of other competitive

43、 markets,insurers stand accused of using“complex and opaque”pricing prac-tices that have led to very high prices for some long-standing customers.The FCA found that,on average,new customers paid 285 a year for motor insurance,while existing customers typically paid 370.The gap is even greater for cu

44、stomers in the home Fiona BondAnalysis from market research firm Consumer Intelligence showed that 55%of motor insurance brands on price comparison websites signif-icantly increased prices in January.The results were even more pro-nounced across the home insurance market,with 70%of brands signifi-ca

45、ntly increasing prices.Consumer Intelligence said the rules had led to the biggest month-on-month increase in home and motor insurance in January in over eight years,with the average premium for home insurance jumping 9.1%,while motor insurance rose by 4.9%.For Karen Houseago,head of insurance at Co

46、nsumer Intelligence,the sharp rise in prices suggests the majority of insurance providers made a one-step change to new busi-ness premiums in order to be com-pliant with the new rules.Houseago says:“It does appear that some providers either over or under-shot in their expectations of mar-ket-level i

47、nflation and have made adjustments subsequent to their ini-tial pricing changes.However,it is still a very competitive market and we are neither observing nor antici-pating an upward spiralling of prices at the rates we saw in January.”But she concedes that underlying pricing pressures are broadly u

48、pward:“We do anticipate general inflation in prices across both motor and home in 2022.”Why stopping the loyalty penalty may rebound on consumersMalcolm Tarling,chief media relations officer at the Association of British Insurers,says:“Everyone will be looking out for any unin-tended consequences.Fo

49、r example,where different parts of the distri-bution chain do not apply the rules in the same manner,leading to some customers not receiving the same outcomes as others.”But he says the price of home and motor insurance will remain a com-mercial decision for individual insurers to take.“Home and mot

50、or insurance premiums are calculated by insurers independently,using a wide range of factors,”he explains.“For motor insurance,your age,type of vehicle,driving record and claims history will typically be relevant.”Although the new rules are still in their infancy,data so far suggests that insurance

51、customers are already facing heftier premiums as providers jostle to find their place in the new landscape.One way providers can demonstrate their commitment to customers is to start an open and transparent dialogue about the changesP R I C I N G S T R U C T U R E STCommercial featureleet owners hav

52、e long grap-pled with high insurance costs caused by the archaic way risk is calculated.Though insur-ance has always been an industry reliant on data,the challenge has been making use of more granular data,across different spectrums in real time,to be smarter and more transparent in distributing cos

53、t in a risk-transfer transaction.Various waves of insurtech have sought to challenge the traditional structures of costing risk,including fractionalising the price through epi-sodic-type insurance,such as toggling coverage in moments when risk expo-sure is higher.Yet,while policyhold-ers save money,

54、it is unsustainable for insurers,who effectively end up under-pricing the exposure signifi cantly.Transforming the ways in which expo-sures are quantifi ed and prices are distributed is one part of the puzzle.However,to reduce prices while also keeping insurers in business,there needs to be a way of

55、 reducing the exposure and that can only happen by changing behaviours.Data comes into its own in the next wave of insurtech by driving smarter decision-making on both sides of the fl eet insurance equation.If insur-ers know what the insurer object is,where it is and what its exposed to at any point

56、 in time,they can distrib-ute the price fairly.And if the insured understand how their actions impact their exposure,they can actively reduce it.“Fleet insurance today is a 20-year-old product which calculates expo-sure by assuming next year will be the same as what happened in the last three years,

57、”says Mark Musson,founder,CEO and chief product Dynamic pricing transforms fl eet insuranceData holds the power to enable fairer insurance premiums in the insurance sector by ensuring the price is distributed more accurately and driving vital behavioural changearchitect at fl eet insurtech fi rm Hum

58、n.“Crucially,they distribute price evenly,despite the risk being so unevenly distributed.Some may be parked,others driving,some driven well,others less so,and some driving in more dangerous areas.“You end up with many vehicles,with differing degrees of risk,sitting under one blanket policy.Data is t

59、he key to better fl eet insurance pricing,but a pure-play tech solution is not the answer.You need to use data in two ways:fi guring out the exposure and changing behaviour to reduce that exposure.The former with-out the latter fundamentally will not affect the end bill.Youll still pay the same high

60、 prices because your expo-sure is still high.”Humn is transforming fl eet insurance through an intelligent platform that can granularly understand whats going on across a fl eet of vehicles in real time,and therefore accurately calculate exposure.Acting like a gas meter,it is constantly measuring th

61、e exposure of each vehicle within the fl eet in order to more fairly distribute the price of insuring it against risk.This is complemented by data insights that educate and empower drivers on how their behaviour infl u-ences insurance exposure.Both behavioural tools and behavioural psychologists in

62、Humns team,mean-while,engage risk managers with the overall exposure,as well as identifying the human,data and environmental ways to reduce that exposure.When the price is distributed evenly,exposure is calculated accurately across the entire utilisation of the fl eet and risk management tools are u

63、tilised,the price will typically be lower.“Its not a discount,its just a refl ection of the reduction in the exposure,”says Musson.“Thats the power of our platform:the ability to understand and infl uence what the actual exposure is.The future of fl eet insurance is dynamic pricing because it drives

64、 benefi ts for everyone in the value chain:better value for insurers and fl eet owners,and safer roads.“The future of fl eets,meanwhile,is about automation,starting with longer-haul routes.We will shortly be releasing the fi rst version of our autonomous vehicle insurance policy,which works on the s

65、ame dynamic pricing principles.Ultimately,we are attempting to cover the whole supply chain and to do that you have to be able to address both the current,by moving to dynamic pricing,and then the future,which is autonomous vehicle insurance.”For more information,visit humn.ai/timesFYou need to use

66、data in two ways:fi guring out the exposure and changing behaviour to reduce that exposurehe impact of the Covid-19 pandemic means we will never think of risk man-agement and insurance in the same way again.There have been very few instanc-es in the last 50 years where cir-cumstances have changed so

67、 quick-ly,and the fragility of our physical and financial health has been exposed so brutally.The Chartered Insurance Insti-tutes research with consumers and businesses has shown the impact of the pandemic has been very uneven.In 2020,just over a fifth of small and medium-sized enterprises(SMEs)told

68、 us that they had been seriously impacted by Covid-19.By 2021 that figure had only come down to 18%.In contrast,only 17%of SMEs had experienced no impact.On an individual level,the differ-ence is even starker around one in 10 consumers told us they had been significantly impacted financially by Covi

69、d-19 in 2020 and 2021,where-as more than 47%said they had experienced no financial impact.Clearly,government measures to reduce the financial impact of the outbreak of Covid-19,such as fur-lough,have made a huge difference in terms of the numbers of people affected financially.But,for those affected

70、,the impact,in many case,has been huge,destroying businesses and taking away livelihoods.As we take stock of both the pan-demic and other huge,systemic risks that could affect us,such as cyber risks or solar storms that could temporarily close down cru-cial infrastructure,it is clear that the stakes

71、 are high.Whether we come through sys-temic risks unscathed or whether we find ourselves financially far worse off will depend on a complex series of choices that may seem rel-atively unimportant before the risk becomes real.The insurance market is chang-ing in the light of these risks.For SMEs,the

72、days when most of the risks they faced were covered by a small number of basic insurance policies are being replaced by a market where large risks like cyber,intellectual property and pandem-ics are becoming increasingly cov-ered by standalone policies,and are less likely to be incorporated into gen

73、eral policies.For businesses,preparing for risk is increasingly becoming about assembling a package of different insurance contracts,and,crucially,building a strategy to mitigate uninsurable risks.Even before the pandemic,insur-ance brokers were giving risk man-agement advice that went far beyond tr

74、aditional insurance contracts.Many of them were starting renewal conversations with their clients that talked about uninsurable risks first,and only moved on to renewing existing contracts later.In the 2020s,insurance is as much about risk management expertise as it is about supplying capital in a c

75、risis.This is why the Chartered Insur-ance Institutes new President,Peter Blanc,has put advice at the heart of the CIIs work.This situation is normal in other professions.Accountants and law-yers do not sell anything other than their advice.When we talk to a doc-tor,we expect the treatment to go bey

76、ond products like drugs to more holistic solutions like rehabilita-tion,lifestyle advice and a wide range of treatments.In the finan-cial advice sector,financial plan-ners have moved their focus purely towards advice,and away from arranging products.There will always be a place for tra-ditional insu

77、rance:pooling capital to prepare for catastrophic events.However,if we do not use what we have learnt over the last two years to build an adequate risk advice sector,we will have missed an opportunity to make both our economy and our society much stronger.If we dont use what weve learnt to build a r

78、isk advice sector,we will have missed an opportunityTI N S I G H TMatthew Connelldirector of policy and public affairs of the Chartered Insurance Institute2.8%5.8%increase in the average home insurance premium in the 12 months to January 2022,currently stands at 154increase,however,if you are over 5

79、0,when your average home insurance premium is 161Consumer Intelligence,2022R A C O N T E U R.N E TF U T U R E O F I N S U R A N C E0706First introduced in the 1990s,usage-based or parametric insurance often relied on hardware.“Carriers had to provide the hardware and customers were expected to insta

80、ll it,use it to track their behaviour and then return the device via mail,”says Udi Ziv,CEO of insurance soft-ware company Earnix.“There was limited value even under the most optimal circumstances.”Things have changed since and the ability for insurtech to harness those changes has been key to the r

81、esurgence of parametric insur-ance.Almost everyone has a smartphone that is capable of tracking where they are,how fast theyre travelling,and where they visit on a given day.While there are obvious implications for car and vehicle insurance,the reality is that the picture painted of our lives and ha

82、bits by seeing where we go on a day-to-day basis is a boon for insurers in all areas.It means that its possible for insurers to more accurately esti-mate risk against individual con-sumers,and make changes on that basis.Yet to properly implement that kind of parametric,tailored insurance requires a

83、lot of work within organisations,says Jay Chitnis,senior business consult-ant at software company Endava.“To be able to personalise their offers in the first place,insurers need to understand what data is available in their organisation,if it is usable and how to exploit the data to get to the insig

84、ht within it that is so valuable,”says Chitnis.“This is easier said than done as many insurance companies sys-tems have evolved organically,leading to siloed data islands that are hard to utilise.”Matt Connolly is CEO of Snr,a startup scouting and open innova-tion platform targeted at the insur-ance

85、 industry,and his job is to keep track of the latest developments changing insurtech.He says the most obvious trend involves artificial intelligence and machine learning.However,while the application of AI in insurance policies is becoming much more common and widely accepted,one area that is still

86、ripe for revolution is pricing and underwriting.“Youre talking about culturally a group of underwriters on a global basis being pretty much late to the innovation party and not accepting all the complexity of the changing model of insurance,”Connolly says.But slowly,the industry is waking up to the

87、value that AI can provide.In the past 12 months companies such as Tractable have become insurtech unicorns companies valued at more than$1bn for what they could potentially deliver to the industry.Such companies use AI to try and improve the process of not just offering insurance products,but also p

88、aying out on claims.“You might have a car crash and use your smartphone to inform your insurer,”Connolly says.AI could then diagnose the cost of repairs by analysing images of the damaged vehicle taken by the policy-holder.“As the market changes,companies are struggling to adapt at the pace of chang

89、e,”says Connolly.Low-code/no-code development allows insurance providers to create poli-cies and apps using a graphical interface rather than reams of code and teams of developers.This ena-bles insurers to bridge the gap between wanting to launch a new product and actually doing so.Insurance product

90、s and the apps that service them often have to go through significant testing,tweak-ing and quality assurance processes before theyre able to be unleashed on the world.“Low-code/no-code allows them to say:Well actually,if theres a new market over here,we want to tap into that,so heres some-thing let

91、s go,”Connolly says.Low-code/no-code demolishes some of the silos that can set back real change in the insurance indus-try and allow it to adapt to chang-ing methodologies.The risks,how-ever,need to be carefully considered:what may be seen as a speedy way to spin up new branch-es of a business could

92、 be viewed as developing ideas without much evi-dence of their value or viability.AI-driven coverParametric insuranceLow-code/no-code developmentGet the FREE Dispelling InsurTech Myths eBookFind out the truth about what insurance technology can do,what it cant do for your business,and the circumstan

93、ces needed to take full advantage of it.Simply scan the QR code and receive your copy straight away.INSTANDA.COMPerhaps the hottest topic in the world of insurance,embedded insurance relies on the connectivity of companies through application programming interfaces(APIs).It helps to transform insura

94、nce from a product into a service.“It will change the course of insurance as we know it as buyers,”says Connolly.“We wont be going to an insurance company to buy our insurance.”Instead,customers will go to a shop to buy a particular product,such as a laptop,and an associated insurance cover will be

95、created based on our needs at a hyper-per-sonalised level.Airbnb already embeds host protection insurance,Youve probably heard the hype about blockchains ability to dis-rupt every industry under the sun.But for insurance,its a true tech innovation that could make a meaningful difference.And thats th

96、e reason why storied insurers with long histories are starting to turn towards blockchain.Twenty of the worlds biggest insurers,including Zurich,Hannover Re and Allianz,are part of B3i,a blockchain working group for the insurance industry.Up until now,the adoption of blockchain has lacked a true bus

97、i-ness case,says Connolly.“Why do we need to use blockchain rather than something else?”is the atti-tude that many insurers have had.But there are now real opportuni-ties for adoption.“It lends itself to nsurtech has become a major part of the insurance market,with record-break-ing amounts spent on

98、technological innovations that can revolutionise the sector.Its an area ripe for invest-ment with more than$1bn(760m)invested every month into insurtech startups in 2021,according to rein-surance broker Wills Re.The momentum that carried insurtech through 2021 is forecast to continue throughout 2022

99、,with plenty of areas within the sector ready for disruption.But what should you be looking out for as the next big thing?Here are five tech-nological trends that are set to transform the way we buy,sell and claim on insurance.Embedded insuranceBlockchainas well as a guest-facing host guar-antee,as

100、standard into all the short-term rentals it provides.Sim-ilarly Tesla gives tailored auto insurance quotes alongside every purchase of its cars.Embedded services turn insur-ance from a bolt-on into something intrinsic,and for insurance com-panies who manage to lead the market,it is a major flag in t

101、he ground for their future.With certain estimates forecast-ing that embedded insurance will become a$3trn market by 2023,it is a must-pursue option.There is one major drawback:those brands insurers have spent years building could end up disappearing alto-gether in the embedded world.insurance beauti

102、fully,”Connolly says.“Its just a clean,organised contract.”Which is exactly what insurers want,with time-stamped entries to ensure that any organisa-tion overseeing it knows exactly what has happened with a customer up to that point.The use of blockchain can benefit businesses by increasing speed al

103、l around.Not having to pore over disparate details of an insurance policy and prior claims because they are all accessible on the block-chain removes delays in assess-ments and payouts.It also has another benefit:an irrefutable record of a policy and its claims builds trust with customers.“Ulti-mate

104、ly,youre going to benefit from a business perspective,”says Snrs Connolly.Low-code/no-code development,blockchain and embedded insurance are among the concepts set to transform the insurance industry this year and beyondInsurtech innovation:5 trends for 202212Chris Stokel-WalkerT E C H N O L O GY54I

105、3As the market changes,companies are struggling to adapt at pace R A C O N T E U R.N E TF U T U R E O F I N S U R A N C E0908nbelievably it is 15 years since Netflix first start-ed streaming films and 13 years since Uber launched its ride hailing platform.They were the original digital disruptors of

106、 established business models;their platform-based offer-ings delivered an engaging,friction-less customer experience that set the bar high.Now they,in turn,are being disrupted by younger busi-nesses.The pressure is always on to innovate,differentiate and meet ever-higher customer expectations of pos

107、itive,enjoyable interactionsThe financial sector is close to facing its Uber moment.Last years revelation that banking app Revoluts value had surpassed that of NatWest was eye-popping but,ts the modern business persons paradox.The more we adopt technology to facilitate remote working and find that e

108、lusive work/life balance,the more value we find in face-to-face gatherings where we can net-work,share knowledge and inspi-ration and take the temperature of our industry.At Insurtech Insights we con-stantly monitor the concerns of all players within the insurtech eco-system to make sure we have a r

109、ele-vant content programme for our conferences.The topics we found were front-of-mind in the run up to the return of Insurtech Insights Europe(on March 15/16th)can help frame future conversations,thought leadership and solutions.Three of the most pressing issues include:1The dynamic relationship bet

110、ween insurtech startups/scaleups and established businesses.The thinking shifts constantly in this area but big players are keen to learn how to spot emerging tech-nologies that will have a future impact on the insurance sector.And,once spotted,they must learn how to evaluate whether to partner or t

111、ake a stake in an innovative entrepreneurial business versus buying outright before a competi-tor spots the opportunity?Finally,how can you know which vehicles aid investment?Do you go the way of Willis Towers Watson and launch a specialist division to invest in emerging digital and technology busin

112、esses?2Embedded insurance.The bundling of insurance cover within a product or service is not new but developments are coming thick and fast,ranging from new distribution channels aided by technology to increasing consumer acceptance of this model.This has a significant impact on future relationships

113、 for I N S I G H TInsurers cannot rely on brand loyalty:customers want frictionless,fast solutionsAs the financial sector comes close to its Uber moment,Bradley Collins and Kristoffer Lundberg of Insurtech Insights explore the hot topics on the minds of insurtech innovatorsThose counting on brand lo

114、yalty to retain business are going to be disappointedIts the modern business persons paradox.The more we adopt technology,the more value we find in face-to-face gatherings in a way,not surprising.Revolut,Monzo et al have been nibbling at the lunch of the established bank-ing brands for a while it wa

115、s only a matter of time until they took a bigger bite.These developments should ring alarm bells for legacy insur-ance businesses to speed up their response to changing custom-er behaviours before they are out-manoeuvred by the nimble strate-gies of technology-driven insurance brands like wefox or Z

116、ego.Covid accelerated the challenges facing the traditional insurer.Cus-tomers in lockdown wanted quotes and had queries about health,auto and travel insurance not to men-tion cover for all those new pan-demic pets.Most importantly,they wanted these queries answered as quickly and painlessly as poss

117、ible.Insurers operating from physi-cal offices have a heavy overhead to carry and had to try to switch servic-es needing a face-to-face meeting to new channels.Those with a fledgling online presence found that scaled-up demand put systems under pres-sure and the provision of a customer experience ba

118、sed on joined-up data extremely difficult.Those counting on brand loyalty to retain business are going to be disap-pointed.Customers now value speed,efficiency and transparency no hid-den costs or T&Cs please.And they want to be recognised the frustra-tions of continuous box ticking and form-filling

119、 every time they return for a renewal or to query their new premium wont wash.Future winners are planning ahead and using tech to reveal efficiencies and get closer to the customer.The wisest know they cant do it alone and are working with partners to navigate all the possible pitfalls of a digital

120、transformation programme.Bradley CollinsChief commercial officerInsurtech InsightsKristoffer LundbergChief executiveInsurtech Insightsinsurers.Benefits include greater consumer accessibility and lower prices but theres a fierce debate around surrendering the insur-ance product to a third party.Ulti-

121、mately,will direct sell fade away?3Automated underwriting.Automated processes are increasingly embraced by the insur-ance sector but questions remain around how much of the underwrit-ing task to hand to AI/machine learning.Standardised formulas for every eventuality are still difficult to devise,so

122、should automation be a tool to augment human judgment and assessment or is the human ele-ment necessary at all?I am writing before our confer-ence takes place but I hope our attendees enjoyed a successful,inspirational and stimulating event.And that the significant value of face-to-face interactions

123、 has been proven once again.IUCommercial featurehe UK faces a mammoth life insurance protection gap.A staggering 8.5 million people who have a need for life insurance,because they have dependents,have no cover at all,found a research study by Swiss Re.Alarmingly,according to the Ruth Strauss Foundat

124、ion,every day 56 children across the country lose a parent who doesnt have finan-cial protection in place.A stagger-ing 50%of all UK parents have no life insurance cover.Another wor-rying statistic is that 42%of mort-gage holders havent got protection either-its a problem which war-rants urgent atte

125、ntion.Yet the ultra-traditional insurance industry has not been forthcoming with a solution,largely because the problem lies at its own doorstep.Life insurance is expensive,complicated and inflexible,yet incumbent provid-ers with huge market shares have little incentive to change it.overcharge custo

126、mers for the first 10 to 15 years of the term,when policyhold-ers are younger and therefore have a lower risk of death,so they can then undercharge in the final period when there is a higher risk of death.“As most people dont reach that period of being undercharged,due to the high rate of cancellati

127、ons,we calculated that customers are over-paying by 1.2bn a year,”says Zeidler.“Fundamentally,the product is just appalling.It completely ignores customers and their needs,and for far too long now the industry has simply failed to address these issues.”The user experience when trying to purchase lif

128、e insurance is equally as poor.On average,it takes over 30 min-utes to buy life insurance with a tra-ditional provider,with many people giving up before they reach the end.The vast majority of the time custom-ers must be quizzed by somebody face to face or over the phone,facing upwards of 50 questio

129、ns.The severe lack of customer-centricity means most banks,relent-less in their desire to provide a seam-less digital experience to users,feel less inclined to offer life insurance products,not least because the FCA stipulates products must meet a cus-tomers needs.“When you combine all of these issu

130、es,you can start to see why so many people dont have life insur-ance,”says Zeidler.“You simply cannot,in good conscience,say a fixed,inflex-ible product meets a customers need.Hence why many banks opt not to offer such products.”As has been the case in numerous sectors,it usually takes a bold,innova

131、-tive startup to disrupt the status quo,and DeadHappy has accepted the mis-sion in this crucial space by reinventing life insurance to be cheaper,easier and designed with the customer in mind.DeadHappy has ripped up the rules of selling life insurance,starting by replacing 23-year fixed term poli-ci

132、es with an innovative pay-as-you-go product which only commits custom-ers for one month at a time.Meanwhile,policyholders can flex their payout amounts and monthly payments in line with their life changes as often as they like,and with no penalties.Each plan comes with a minimum 10-year guarantee.De

133、pending on health status,this can be reset every year.This means a 25-year-old could refresh their plan annually for 25 years,and at 50 years old have an active plan with the 10-year guarantee still in place.DeadHappys products are not only cheaper the average monthly price is 10 compared to 25 for

134、traditional premiums but far more accessible.As the only mobile-first life insurance company,customers sign up in an average of three minutes.The process is entirely digital and,as such,accessi-ble 24/7,with no requirement to speak with anybody.This mobile-first approach is expected by millennials a

135、nd is already introducing a younger demographic to the market.The onboarding process is so seam-less,asking just four medical ques-tions,that the fastest customers have signed up in as little as 1 minute and 34 seconds.And once they are a policy-holder,they are able to flex up or flex down their pla

136、n within minutes online as well.By setting a new standard for customer-centricity,banks can enter the market with confidence.“This is a hugely important innova-tion,”says Zeidler.“For the first time,banks and other major financial insti-tutions can access a fully white-la-belled solution delivering

137、a truly cus-tomer-centric experience.Customers dont suddenly get shoved from the banks staff to the life insurance com-panys staff.The product just sits there in that digital environment as an exten-sion of todays brilliant mobile-first banking journeys.“DeadHappy is totally tailored to the customer

138、,and its the future of life insurance around the world.As a pur-pose-driven business we are hugely passionate about leveraging these innovations were introducing through major financial institutions to close the protection gap which causes so much distress,giving families the pro-tection everyone sh

139、ould have if the worst happens.”“Change is long overdue”says Phil Zeidler,co-founder and CEO of insurtech firm DeadHappy.“The industrys failure to modernise means it is no longer fit for purpose in a digital age where customers needs change frequently.”From getting married to having chil-dren,buying

140、 a house to changing jobs,it is estimated that various life events cause a typical persons needs to change at least five times between the ages of 25 and 40,yet life insurance policies are sold in a remarkably rigid way in the UK.Term life insurance is not only archaic but also inflexible.Typically

141、fixed for a term of 23 years,customers have no way of flexing their policy as their cir-cumstances change.As a result,most customers cancel their policy within seven years.This also means the majority of people are being overcharged for life insurance.By fixing a price for 23 years,insurance provide

142、rs essentially Why 42%of UK mortgage holders dont have life insuranceRigid,clunky life insurance products are causing an unnecessary 2.4tn protection gap across the UK.The creation of simple digital products,distributed through major banks and financial institutions,will ultimately make life insuran

143、ce both accessible and affordableYou simply cannot,in good conscience,say a fixed,inflexible product meets a customers needTFLEXIBLE COVER AND ANNUALLY RENEWABLE PRICING DELIVERS 3,500 SAVING(23%)year 1year 25Monthly Price()01020304050607080people in UK who have a need for life insurance,because the

144、y have dependents,have no cover at all8.5millionIFA PriceDeadHappy Price50%of all UK parents have no life insurance cover42%of mortgage holders havent got protection eitherSwiss Re,2021R A C O N T E U R.N E TF U T U R E O F I N S U R A N C E1110 THE RISKS OF AI DEPLOYMENTShare of insurance-sector re

145、spondents identifying the following as threats of AI deploymentINSURANCEAND ARTIFICIAL INTELLIGENCEService operationsFrom personalised policies and claims adjudication to underwriting and fraud detection,the insurance industry has a lot to gain over the next several years,as AI becomes more sophisti

146、cated and widely applicable.Although AI deployment gives rise to a number of risks,the benefits to companies and customers are enough to justify the industrys optimism and increased AI spending.INSURANCE COMPANIES ARE ALREADY BENEFITING FROM AIInsurance companies benefits of investing in AIINSURANCE

147、 AI STILL LAGS BEHIND GLOBAL INDUSTRIES ON AVERAGEMaturity of AI implementationMORE THAN THREE IN FOUR INSURERS VALUE AI SERVICESShare of insurers that value artificial intelligence competence in their providersTHE MOST COMMON USE CASESMost commonly adopted AI use cases by function,share of responde

148、ntsWe havent yet invested in this areaNot currently realising benefits and do not expect to within two yearsNot currently realising benefits but expect to within two yearsCurrently realising benefits65%49%45%47%47%42%35%31%35%35%38%45%36%47%4%9%11%7%9%7%ISG,2020Deloitte,202142%18%27%22%22%20%17%16%1

149、8%17%16%14%20%22%25%27%27%31%35%36%PwC,2021AI creating new cyber threatsAI disrupting one or more of the sectors in which we operateAI disrupting one or more of the geographical markets in which we operateSocietal backlash against AIAI becoming too complex and/or intelligent to understand or control

150、Customer distrust of AI leading to lost businessUnanticipated AI regulationAI leading to new legal liabilities and reputational risksInability to meet demand for AI skills in our workforceAI creating new privacy threatsGlobal average(across industries)6%47%54%40%40%13%PwC,2021McKinsey,2021Operate mo

151、re efficiently or increase productivityCreate better customer experiencesGrow revenueReduce risksAchieve cost savingsInnovate our products and servicesImprove internal decision-makingAI BUDGETS ON THE RISEAI spending expectations for among insurance industry respondentsDeloitte,2021Insurance industr

152、yService operations optimisationRiskMarketing and salesProduct and/or service developmentRisk modelling and analyticsFraud and debt analyticsContact centre automationPredictive service and interventionCustomer service analyticsCustomer segmentationNew AI-based enhancements for productsProduct featur

153、e optimisationCreation of new AI-based productsSuccessfully deployed use cases in production and continue to scaleDeployed a few use cases with limited scaleLaunched AI pilots,but not yet deployed in production86%expected increase in AI-related investments by banks and insurance companies by 2025Tho

154、ughtSpot,202035%Very important42%Important15%Less important8%Unimportant49%3%18%Expect a large increaseExpect a slight increaseExpect no changeExpect a slight decreaseExpect a large decrease25%50%75%100%0%7%9%15%11%13%3%25%R A C O N T E U R.N E TF U T U R E O F I N S U R A N C E1312Stress testing fo

155、r climate risks is set to become a key plank of the insurance industrys response to climate change.For example,Frances central bank found in 2021 that claims related to natural disasters could rise fivefold in its most affected regions,with pre-miums rocketing as much as 200%over 30 years.The Bank o

156、f England is now undertaking its own evidence gathering to inform future stress testing,with the results expected in May 2022.This in-volves banks and some of the UKs largest insurers and could pave the way for new regula-tion in the future.Justin Elks,partner in risk consulting at advisory firm Cro

157、we UK,believes 2022 will see the transition to net zero take centre stage for UK insur-ers,with regulation acting as a key driver.“With so much regulato-ry activity,addressing climate change might appear to be a compliance activity says Elks.Progressive insurers are how-ever increasingly focused on

158、sustainability as a strategic goal considering and capturing the commercial opportunity of the transition to net zero.COP26 has shifted the emphasis from ambitions and commitments to actions and accountability.“This creates the context for insurers to make a difference to the world in addressing cli

159、mate change and insuring the transi-tion helping to build customer trust in financial services.”Simon Crowther,who is more widely known as The Flood Guy,is an award-winning civ-il engineer.He believes that stress testing is set to become of“vital importance to the in-surance industry”.Crowther warns

160、 that“assess-ing the risks of future disrup-tion from environmental fac-tors should not be ignored and left until it might be too late.The changing climate is warn-ing us on an ever-more regular basis of what is to come,and the time to act is now.”The role of stress testing and regulationhen Storms

161、Dudley,Eunice,and Franklin wrought chaos across the UK during a single week in February,insurers were left facing a huge bill for the contents and property damage caused to home-owners and businesses.Soon after,in early March,experts from the Intergovernmental Panel on Climate Change released their

162、sixth assessment report,with IPCC chair Dr Hoesung Lee describing the document as a“dire warning about the consequences of inaction”.Dr Lee called climate change“a grave and mounting threat to our well-being and a healthy planet”,adding that the actions we all take today will shape how people adapt

163、to this growing threat.For the insurance industry,cli-mate change represents a major challenge.Flooding and high winds arent new,but the potential for more frequent extreme weather events means they must be planned for and mitigated against through stress testing for exposure,a focus on policy avail

164、ability and exclu-sions,and the price of premiums.Chris Bowden,managing director of Squeaky,a B2B marketplace for clean energy,says:“The economic losses to climate-related activities are on track to become the biggest risk in the glob-al insurance industry and I dont think the market is ready for th

165、e full consequences that lie ahead.”Bowden cites the 2019 Climate Disclosure Project report,which revealed the worlds largest 215 companies potentially face$1trn(760bn)worth of financial risks due to climate change,from higher operating costs,asset write-offs and falls in demand.“Many organisations

166、will simply become uninsurable.Historically insurance models were based on paying out periodically on extreme events,”he adds.“However,given extreme weather events are becom-ing more regular,they are having to make more pay-outs.“To cover their losses,insurance premiums are rising to levels that man

167、y just cant afford,and its only going to get worse.”In the UK,work is under way to counter the threat climate change poses to insurance.For example,Flood Re sees government and insur-ers work together to provide flood insurance coverage to domestic prop-erties deemed at significant risk.The Associat

168、ion of British Insurers has also launched its Climate Change Roadmap to explore how the sector can take collective action on net zero while continuing to support policy-holders with their own resil-ience and risk management.does admit insurers may one day have to state that certain things will be ex

169、pected to make proper-ties and businesses“more resilient to the impacts of extreme weather and other climate change impacts”.This could include,for example,ensuring properties meet energy efficiency standards,and that insurers are notified of adapta-tions such as electric vehicle chargers or heat pu

170、mps.“Thats not a major change,”he explains.“In other areas,when peo-ple are doing risky activities,there will always be conditions imposed.”And he adds:“I dont think were at the point yet where we could speculate on whether there will be aspects that simply become too big to insure,but I think if yo

171、u look at comments industry leaders have made on climate change,its clear that if we dont do enough,then we will reach a point where certain activities are simply uninsurable.”A greater use of technology could be one way forward for climate change mitigation.GeoSmart Information has launched FloodSm

172、art Analytics,to enable insurers to accurately assess flood risk depths,probabilities and the related costs,including climate change impacts.Meanwhile Aspia Space offers satellite imaging that uses AI to help insurers identify and under-stand trends,predict flooding risks and make faster,more inform

173、ed decisions.Simon Lancaster is founder and CEO of SJL Insurance Services,a Lloyds broker,which insures all types of businesses,from sole traders to corporations,across the world.He believes that the increase in storms and flash flooding has forced insurers to change how they view certain things-and

174、 how they underwrite them.As a broker and underwriter,SJL looks ahead at a shorter time period than insurance companies,which focus on trends 10 years into the future,Lancaster explains.“What SJL does is follow the data,look for trends about one to two years ahead,analyse performance on sta-tistics

175、and adjust our rates and acceptance criteria accordingly.”Lancaster cites the example of flood risk assessment,which had previously focused on a combined flood score.This meant both the result of river and coastal flooding and surface water.Nowadays,a keener interest is instead taken in the surface

176、water score alone,as this is making a larger impact on flood claims.Like the ABI,Lancaster believes that significantly more can be done internally,by the insurers themselves,to tackle climate change.But he warns:“Ultimately even with the best underwriting and interpretation of data,the sheer increas

177、e in storms and flood-ing will have one end result claims increase and therefore so will premiums.”DENIS CHARLET/Contributor via GettyImagesFor the insurance industry,climate change represents a major and immediate challenge.With extreme weather events set to become more frequent,how will the sector

178、 adapt its policies,premiums and processes?Climate change:the storm on the horizon for insurersJonathan WeinbergThe economic losses to climate-related activities are on track to become the biggest risk in the global insurance industryINSURERS CAN HELP WITH TRANSITION INVESTMENTSThe Association of Br

179、itish Insurers believes its member investment capacity to support up to one-third of the investment needs(in trillion GBP)Collaboration.Pragmatism.Sustainable value.We work with you collaboratively to embed pragmatic approaches that address todays complex business challenges by:integrating climate a

180、nd sustainability mastering data enhancing risk and governance building resilience delivering transformation.We build sustainable value by helping you respond to and benefit from change and uncertainty.Start the conversationJustin Elks Partner justin.elkscrowe.co.uk+44(0)20 3457 decisions.Lasting va

181、lue.Audit/Tax/Advisory/RiskCrowe U.K.LLP is a member of Crowe Global,a Swiss verein.Each member firm of Crowe Global is a separate and independent legal entity.Crowe U.K.LLP and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any other member of Crowe Global

182、.2022 Crowe U.K.LLPCroweUKCrowe_UKR I S KWBen Howarth,the ABIs climate change manager,accepts climate change will have“a major impact”on all parts of the insurance indus-try.But while he describes it as a top priority issue with no room for complacency,he also believes the sectors unique role and si

183、gnificant investment capacity allows it to play a key role in helping people adapt to future risks.“The risks are very significant,”he says.“I think the industry is very aligned to that.But I think at this stage,its probably too early to speculate on at what point those risks would become uninsurabl

184、e.The key thing is to do as much as we can to mitigate the impacts of climate change.”Howarth suggests the insurance industry should work closely with government,businesses,home-owners and motorists to find ways to encourage them to reduce car-bon,take up electric cars and make changes to properties

185、 through an“educating and informing role”.However,while he does not believe we are there yet,Howarth UK transition investment demand 2021-2035ABI member UK investment capacity 2021-20351.12.70.9ABI,2021R A C O N T E U R.N E TF U T U R E O F I N S U R A N C E1514With cyber attacks on the rise,compani

186、es must ensure they have the right insurance policies and business practices in place to safeguard themselvesprivacy and cybersecurity partner at law firm Hall Booth Smith.“When a client suffers an event,whether that be a ransomware attack or a business email compromise,often their policy isnt geare

187、d up to deal with the poten-tial losses they will incur,and theres a disconnect between what their pol-icy actually covers them for and the appropriate coverage they need.”A common problem is silent cyber,which means that potential cyber-re-lated events or losses are not express-ly covered or exclud

188、ed within tradi-tional policies.This can lead to unexpected coverage gaps.There is a solution.Standalone cyber insurance protects companies specifically against cyber attacks,providing emergency incident response and recovery services,ran-somware negotiation and reim-bursement,business income loss a

189、nd follow-on liability coverages.They will help to plug coverage gaps,protecting against losses caused by damage or data loss from IT systems and networks.The policy can also be used to engage a PR firm for manag-ing a cyber incident in the media when reputation is at stake.If a business has more th

190、an one pol-icy,its vital to check theres no over-lap or duplication of cyber coverage.“In order to ensure the best out-come,its imperative for businesses to work with a specialist cyber broker to review their coverage thoroughly to see what they need and be able to explain the risk fully to the unde

191、r-writer,”says Kyle Bryant,chief under-writing officer at Resilience.“There are plenty of innovative solutions out there to meet any com-panys individual requirements and plug any gaps they may have.”shipping ports and supermarkets to advertising agencies and law firms.These attacks can be hugely da

192、mag-ing,not only operationally and financially,but also in terms of repu-tation.According to IBMs Cost of a Data Breach report 2021,organisa-tions shell out,on average,$4.24m(3.22m)per incident.“As a risk,silent cyber still isnt on the radar of most organisations,”says Tracie Grella,AIGs global head

193、 of cyber risk insurance.“The prob-lem is that they arent assessing the risk and working out where their exposures are,how their policies will respond and whether they would be covered for an event.”So what are the cyber risks compa-nies need to be aware of and what should they do to mitigate agains

194、t them?What insurance do they need to protect them if an attack occurs and how can they plug any gaps?echnology is enabling busi-nesses to grow further and faster than ever before,accelerated by the need to digitalise in the wake of the Covid-19 crisis.Despite the undoubted business ben-efits,this p

195、eriod of rapid change has also left companies more exposed to cyber threats than ever.Many of these cyber risks are so new and complex that most firms arent prepared for them.Worse still,in the event of a cyber attack,compa-nies traditional property insurance coverage wont protect them because many

196、of these risks arent implicitly included or excluded within the poli-cy a phenomenon known as silent cyber or non-affirmative cyber.And businesses often only find out theyre not covered when its too late,as evidenced by the WannaCry,Petya and NotPetya cyber attacks of 2017,which devastated everythin

197、g from d3sign via GettyImagesAlex Wright them from happening in the first place.That requires identifying their key exposure areas to cyber risk,quantifying loss scenarios and appe-tites,and establishing robust cyber-security and risk management strat-egies and controls that everyone in the organisa

198、tion understands.Networks and systems should be regularly updated through the latest security software backups on the cloud,patches and upgrades,and tested to make sure they are protect-ed.In addition,companies should restrict systems access only to those who need to use it,particularly when dealing

199、 with third-party providers.Firms should encrypt data,adopt virtual private networks and use multifactor authentication.The key to improving cybersecurity is ensuring staff receive regular training so they can identify suspi-cious activity and potential prob-lems.This includes not opening unsolicite

200、d emails,creating strong passwords and not using personal devices for work.Should the worst happen,firms also need to have cast-iron incident response,disaster recovery and busi-ness interruption plans in place to get back on their feet quickly.Insurers can help both with designing a risk mitigation

201、 plan,and providing access to the necessary legal,forensic and claims teams needed post-event.Insurance policies can help busi-nesses recover their losses after a cyber attack.However,many compa-nies that previously relied on their standard property or liability policies have now found to their cost

202、 that theyre no longer covered.“Cyber risk has implications across the board,”said Rich Sheinis,data Is your company at risk from silent cyber?The fastest growing and most cost-ly form of cyber attack is ransom-ware.Often originating in nation-states such as Russia and its neighbouring countries,ran

203、som-ware attacks use malicious software to block access to a computer system and the hacker will then typically demand large sums of money often in the multi-million dollar region for the system to be unlocked again.Phishing or social engineering scams are on the rise too,with vic-tims sustaining$1.

204、7bn in losses from business email compromise alone in 2019,according to the FBIs Internet Crime Report.But the costs go far beyond the initial loss:they extend to business interruption,forensics,recovery and restoration expenses.To guard against cyber attacks,businesses should try to prevent When a

205、client suffers an event,often theres a disconnect between what their policy actually covers them for and the appropriate coverage they would needARE INSURERS TAKING CYBER SERIOUSLY ENOUGH?Percentage of global insurers who say they expect to increase spending in the following areas in 2022 C Y B E R

206、S E C U R I T YTBlockchainMobile technologyRobotic process automationData analyticsCybersecurityData acquisition and processingData privacyCloud computing and storageArtificial intelligence16%24%24%20%26%18%33%22%25%42%39%41%47%42%51%37%50%49%32%24%21%25%25%17%22%20%18%4%12%13%5%2%13%5%8%3%5%1%1%3%3

207、%3%1%3%Deloitte,2021Expect a large increase in spendExpect a slight increase in spendExpect no changeExpect a slight decrease in spendExpect a large decrease in spendCommercial featureefore tackling how trans-formation should occur,its vitally important to under-stand why transformation is needed.Ac

208、cording to Roland Scharrer,group chief data and emerging technology officer,AXA,its because the funda-mental relationship between insurer and insured is changing.“Youre build-ing a partnership with the client and you shouldnt be seen just once a year.”This is part of AXAs from payer to partner strat

209、egy.“The more consumers invest in their connected devices cars,homes,watches youre building a partnership with them,”adds James Barnard,CIO,Aviva tech shared services and divest-ments.“Everywhere they go,youre going with them.Youre acting like a guardian angel.”Theres no doubt that there is certainl

210、y much more opportunity through digital transformation to play a bigger role in consumers lives increasing engage-ment and,ultimately,ROI.But its also a place to tread lightly.“Its important to be led by what the customer wants and where we think we can add value to the process,”warns Anita Fernqvis

211、t,UK chief data officer and director of oper-ations,Zurich Insurance.She notes that not every step of every insurance rela-tionship needs the white glove treat-ment.Simple,automated efficiency can add value too.“That interaction point could be touchless,it could be automated,it could be empathetic i

212、t could be all three,”reveals Chirag Jindal,head of insurance,Americas,ServiceNow.“Insurance is a promise and we have to wrap the narrative of the customer journey with that promise in mind.But how you wrap that around technol-ogy to deliver it and let the customer choose thats the problem we are tr

213、ying to solve.”And,he adds,“we have to be cohesive”.Here is the biggest challenge insurers face.The customer has expectations,set not by other insurers but by the likes of Netflix,Amazon and ASOS.They expect the process to simply work.Getting that process to work end-to-end,whatever happens,is far f

214、rom simple.“You have a lot of expectations of an Amazon-like digital experience but insurance is a very complex product and you have to serve the client at very specific moments of truth,”warns Scharrer.Its something that insur-ance companies may have been doing for centuries,but while that delivers

215、 a huge amount of experience,it also brings with it some significant hurdles.“For an organisation like ours,the real challenge is updating our core infrastructure,cloud capability,robot-ics and intelligent automation to bridge what is expected of us by consumers today,”Barnard reveals.Being con-stan

216、tly available,leveraging digital cur-rency and providing a seamless tran-sition into what can,quite often,be 70-plus years of legacy estate.”So that cohesiveness that Jindal speaks of begins to seem like a pipe dream,given the scale of the challenge.The challenge of bringing a sprawling,global insur

217、er with decades of legacy systems and customer information into a seamless,end-to-end experience in a single,smooth action.We have to add to this that the insured arent just large organisa-tions,they serve a massively diverse audience.“We have very different customer segments and that means one size

218、 does not fit all.We have to be really clear about what real-time really brings to customers,for example.In other places,the importance could be relationship-led interactions with digital interventions,rather than end-to-end,”Fernqvist insists.At times,it can seem that there are hurdles at every tur

219、n.Cloud trans-formation,for example,is seen as bringing major advances in insurers ability to overcome legacy issues,but it too comes with its own set of chal-lenges.“On the one hand,we need the cloud to provide the elasticity of infrastructure,scale and availability,”says Scharrer,“and at the same

220、time you must ensure a high level of data privacy standard.”And still,he adds,transform the legacy environment.How data is treated in the transfor-mation piece is critical.As a heavi-lyregulated industry,one might argue that insurance actually has an advan-tage in the face of a data-sceptical public

221、.Its trust is surely baked in as a result of those tightly defined parame-ters.Fernqvist concurs:“Trust is criti-cal.For us to serve our customers needs,we need their data.Weve got to be able to handle it in such a way that weve earned and retain that trust.Regulation helps us protect our cus-tomers

222、 and make sure that were build-ing with the customer in mind.”Data governance is,therefore,a key concern and again,due to the often diffuse and complex nature of insur-ance organisations,not one that is easily managed.“The ethical use of data is very important.We have 18.5 million unique customers a

223、nd thats a tremendous amount of data.The use of third-party enrichment has levelled up the playing field but with that comes more responsibility,”suggests Barnard.Scharrer adds that building a data-led or data-fed culture is critical.He says its about bringing“a data-driven cul-ture thats understood

224、 from the claims handler to business decision-makers.Bringing the whole organisation behind that,either through incentivisation or governance,so that its protected and leveraged as an asset.”Of course,it can only be truly lever-aged as an asset if the right people can access the right information at

225、 the right time.Organising where data is held and how it fits into the multifarious work-flows can be a task of mind-boggling complexity,but Jindal has some sug-gestions which marry closely with how integrating new channels and technol-ogies can work more effectively across the organisation as a who

226、le.“You need some kind of orchestration layer that can tie the broker experience to the middle and the back offices,and carry that across the value chain,”he advises.“At every point of the journey,everyone should know what the status is.How you orchestrate that has been the biggest challenge that in

227、surers are talking about.”Specifically from a data organisation perspective,he adds:“How do you present the right data to the right person at the right time?You dont want to overwhelm them.What does a claims agent or customer ser-vice operative really need to look at?”Fernqvist agrees,stating:“One o

228、f the big challenges with data is figuring out what needs to be centralised but also how we make sure we decentralise to allow innovation.”Innovation in this context is key.The world is moving fast and insurers need to be able to make the most of the latest technologies themselves highly dependent o

229、n quality data to stay ahead of the game.Scharrer points out the use of AI to be able to ingest other data sources such as documents,photos and satellite technology to speed up and enrich customer interac-tions but warns about being too hasty and insists on the importance of data quality.“There has

230、been an expecta-tion that AI solves all our problems in databases and customer journeys.But people are realising its still hard work.”Barnard is,however,undeterred:“Cognitive learning is a really powerful tool.Thats where we start unlocking the value of rich data and thats come a long way in the las

231、t three years.”This whole process,Barnard concludes,“is a really exciting journey that weve only just started.”To find out how ServiceNow can enable digital transformation and improve experiences in your organisation,visit payer to partner:transforming the insurance promiseWhat will the truly transf

232、ormed insurer of the future look like?That was the question posed to industry experts during a roundtable exploring the technological,cultural,structural and ethical challenges facing insurersBAt every point of the journey,everyone should know what the status is.How you orchestrate that has been the

233、 biggest challenge that insurers are talking aboutPanel James Barnard,CIO,Aviva tech shared services and divestments Anita Fernqvist,UK chief data officer and director of operations,Zurich InsuranceChirag Jindal,head of insurance,Americas,ServiceNowRoland Scharrer,group chief data and emerging techn

234、ology officer,AXAMorag Cuddeford-JonesR A C O N T E U R.N E TF U T U R E O F I N S U R A N C E1716co-founder and CEO of Collective Benefits,an insurtech company launched in 2019 to build a safety net of cover for freelancers and gig-econo-my operators,says he wants to employ“creative problem solvers

235、”.“The ability to think as if you are a customer and put their needs at the forefront of every decision you make is crucial to our success,”he says.“Ultimately,this requires a blend of a smart,forward-thinking mindset and compassion skills you may not originally consider when applying for a job in t

236、he insurance sector.These softer skills,as well as a firm grasp of the fundamentals of insur-ance,are vital for career success.”Beilin urges traditional employers to“use the evolution of customer needs and changing markets to think out of the box”in terms of products and skills.“It is time to accept

237、 that the tried-and-tested methods are not an effective way to attract emerging tal-ents or to close the widening knowl-edge gap,”he continues.“For instance,wed like to see more companies avoid the standard ritual of sending employees on a traditional training course and explore new learning avenues

238、 such as intern-ships with tech companies and trial-ling new courses to increase under-standing of digital-user experiences.”Encouraging employees to extend their understanding of how newer sectors create modern user experienc-es enables them to develop skills and gain technical knowledge,he adds.Wh

239、ite agrees.To those consider-ing a career in the industry,she says:“If you want to make a massive difference to peoples lives,enter the insurance profession.By deep-ening your knowledge and enhanc-ing your skill set,you can build a highly rewarding career shaped around your talents and pursue an ext

240、ensive range of paths through-out your working life.”Boring uncles need not apply.risks,has shaken the boring uncle from his lethargy.Growing risks faced by the industry include cybercrime,autonomous vehicles and data privacy.Add a potential Third World War,climate change,Brexit and Covid,and sud-de

241、nly,insurance is a hugely topical and exciting industry.Many acknowledge,however,that Matrix-style speed-learning is neces-sary to keep pace with the change.Indeed,30%of 975 Chartered Insurance Institute(CII)members admit that,in 2022,“gaining the right skills and knowledge to best serve customers i

242、s the biggest challenge they face”.Chief customer officer Gill White says recent CII research,published in late January this year,found that insurance professionals“rec-ognise they need a combination of technical knowledge,skills and behaviour to secure the trust of the customer and help them improv

243、e their financial resilience”.nfairly or not,the insur-ance industry has long endured a reputation for being dull.And it has so the sneering logic goes attracted similarly uninspiring people.A 2016 Spectator article,in which it was labelled“the boring uncle of the financial services family”,encapsul

244、ated the general attitude.In the six years since its publica-tion,though,the insurance indus-try has been forced to undergo a seismic transformation.As a result,it appears to be breaking free from its avuncular cocoon.The insurance market has been heavily disrupted following decades if not centuries

245、 of sticking to the same old business model and broad-ly similar products.The threats posed to traditional approaches by innovative insurtechs(technology innovators within the insurance sector),allied with the need to pro-vide cover for a rapidly expanding range of emerging tech-related Maskot via G

246、ettyImagesOliver Pickup and the technical ability to use real-time data to offer insights will put the customer at ease.To stand out in an increasingly crowded insurance market,Car-diff-based Admiral Group,founded in 1993,recruits staff who can follow its“customer-first”philosophy,be sensitive to th

247、eir needs and use tech-nology to inform interactions.“As an insurer,we deal with seri-ous incidents and distressing cir-cumstances,so our agents,empow-ered by the data at their fingertips,provide exceptional customer ser-vice,”says UK chief information officer Alan Patefield-Smith.“Its not about the

248、 system or the data;there has to be a human element to understand the customer need.”The events of the past two years have altered what customers priori-tise from insurers,he says,with trust now“the number-one facet,above price,for the first time”.Patefield-Smith identifies a“holy trinity”that can h

249、elp foster customer trust.“Its about surfacing the right data,then presenting the data to the agent at the right time and the agent having the right philosophy.”Notably,Admiral Group,which has more than 11,000 employees,is the only com-pany to have been named one of the Sunday Times Best Companies T

250、o Work For every year since the list began in 2001.With 87%of staff reporting that its a“great place to work”,the company has few issues attracting top talent.But to retain workers,investment has been poured into development pro-grammes to build career paths“with mobility at the core”.Traditional in

251、surers,such as the Admiral Group,must compete for tal-ent with innovative insurtechs seek-ing to scale at speed,and with a start-up approach that may appeal to younger generations.Anthony Beilin,Boring uncles need not applyTechnological innovation is the driving force behind the insurance sectors ne

252、ed to transform its lacklustre reputation,with digital know-how and empathy now topping the list of skills staff need to better serve customersIS INSURANCE KEEPING UP WITH TALENTS HYBRID WORK DEMANDS?Percentage of global insurers who say they are considering the following hybrid return-to-work optio

253、nsThose looking to excel in an insur-ance career require“a comprehen-sive understanding of our sector:its fundamental principles,its market and products,and the laws and reg-ulations that govern it,”she advises.And more than ever,leading candi-dates“need specialist knowledge to provide expertise,esp

254、ecially when technology is reducing the adminis-trative burden,speeding up process-ing,and freeing up time to focus on more holistic advice and support”.White adds:“Our challenge,as insurance professionals,is not just to understand the risk and how prod-ucts and services can transfer,miti-gate or ma

255、nage it but to apply the right behavioural skill set to innovate quickly and apply the right solutions.”And thats the crucial point:acute situations require empathy.Those armed with compassion,knowledge TA L E N TU10%11%16%3%20%35%4%Not applicable-all our employees are eventually coming back to the

256、officeTotally up to the employees to decide whether they come to the officeEmployees can choose where they work but must come to the office for certain meetingsNo institution-wide expectations,managers decide whats best for their teamEmployees must work a certain number of days in the office but can

257、 choose which Employees must come to the office on specific days but can work remotely otherwiseEmployees will follow a schedule and must work in the office on their designated day Commercial featurever the past century,the insurance industry has adapted quickly to change.From the asbestos crisis of

258、 the 1900s,which brought about huge changes in how companies manage capital and introduced a large framework of reg-ulation,to Hurricane Andrew in 1992,which brought the winds of change to natural catastrophe modelling,the insurance industry was nimble in reacting to seismic events.In recent years,t

259、he industry has responded quickly to such major events as the 2016 NotPetya ransom-ware attack and catastrophic flooding in the UK,meeting the pace of change by increasing insured awareness of both cyber and flood risk.“The insurance industry changed in response to these crises quite nicely,”says Ch

260、arles Clarke,global vice-presi-dent of sales analytics,at Guidewire.Yet one change that the insurance industry has been sluggish to respond to is the explosion of big data.“The human race has generated 90%of all the data it has ever generated in the past two years,”says Clarke.One sextillion bytes o

261、f data are produced every year,and every bit and byte is an opportunity for insights that can Tens of thousands of underwrit-ers,claims adjusters,actuaries and loss control engineers work on Guidewire systems every day.The company believes that in the US each year it facilitates the administra-tion

262、of 300 million policy sales,price lookups,claims settled and quotation requests issued.Guidewire is a trusted name to help navigate the world of big data in an industry that needs to be certain that its sums and assumptions all add up and does so in a way that can keep pace with the speed of change.

263、With massive changes in the risk profile of insured exposure over the past few years,the cost of insuring risk is fast outpacing the prices that can be charged in many lines of business.“It is portending some very chal-lenging times for insurers,”says Folkman.The way to avoid those chal-lenges is by

264、 belt-tightening:becom-ing intently focused on selecting and pricing risk correctly,and being disci-plined on avoiding risk that cannot be insured profitably.“The way that insurers are going to do that in the next 10 years is through the use of advanced analytics,”says Folkman.The companys machine l

265、earning algorithms,coupled with the huge volumes of data passing through it every day,mean theres an opportu-nity to rewrite the old ways of operating in the insurance industry to improve performance,while bringing down costs and improving efficiency.A vast amount of capital is flowing into the insu

266、rtech sector.In the past year alone,$10bn of direct investment was ploughed into thousands of startups aiming to reinvent insurance.There are plenty of vendors offering piecemeal approaches that can be put together in a patchwork quilt of providers to bring an insurance offering up to speed.“But we

267、have a very compelling case for being the platform that powers everything,”says Folkman.The Guidewire Cloud platform encom-passes everything from analytics to core systems,data,workflows and open-source tooling,that all work natively together.The combination of all the tools and processes enables Gu

268、idewire to rewrite their use of data from a system of record to a system of insight.“We think we can help the insurance indus-try by helping underwriters and claims adjusters make decisions that help the industry grow and stay relevant,”says Clarke.“Its easy for us to deploy the technology and data

269、in the models to people,because we operate with many of the companies anyway.The potential is enormous,Clarke believes.By using the big-data tools available to Guidewire,the company is able to improve customer engagement by ensuring that automated smart decisions are correct more frequently.This mea

270、ns it is able to pay out claims more accurately and at greater speed,taking hours rather than weeks.Its a virtuous circle that improves with every use and opens up the opportunity for smaller-scale insurance policies that can bring in further customers to insurance businesses.“No insurance company w

271、ants to spend money on acquiring a policy for someone who is only going to drive for two hours on a 10-day holiday because its so expensive,”he adds.But the interlinked data that drives Guidewires business the system of insight,not record allows it to gather data cheaply and efficiently,and allows u

272、nderwriters to make speedier,more accurate decisions.That then means greater efficiencies can be generated at scale for insur-ers,which has a halo effect on the whole industry.The future of insurance has big data at its heart.“The core system of tomor-row is going to be harvesting data in real time,

273、”says Folkman.“Were build-ing it slowly and surely.Tomorrows underwriters mental model of what constitutes a core system will be more robust than the simple transactional role that it has historically played.”For more information please fine tune insurance products.However,they dont.“When insurance

274、companies try to do that,they get all sorts of things wrong,”says Clarke.Problems include datasets that dont talk to one another.Teams that are dispersed.Data that is stored in long-term projects,which means that by the time it is analysed,it is out of date.Guidewires mission is to change that and i

275、n so doing,to change the way the insurance industry works.“We help insurance companies respond proactively to the change happening around them in the insur-ance industry,and to help them turn their system of record into a system of insight.This allows them to take advantage of their data in near rea

276、l time,”says Clarke.The company provides the systems that underpin the global insurance system,with its technology processing hundreds of millions of claims and pol-icies around the world.“Theres about a one in three chance that,if you have a P&C insurance claim or you buy an insurance policy,it run

277、s through one of our systems,”says Chris Folkman,vice-president of product manage-ment at Guidewire Software.How big data is changing the insurance industryData changes at the speed of light,but insurance companies are often sluggish to respondOWe help insurance companies turn their system of record

278、 into a system of insightDeloitte,2021R A C O N T E U R.N E TF U T U R E O F I N S U R A N C E1918he UK insurance industry is poised for a shake-up thats likely to release tens of bil-lions in investment for government projects aimed at building greener infrastructure and advancing Boris Johnsons“le

279、velling up”policy.Westminster wants to clear away numerous regulatory obstacles a legacy of EU membership that have hitherto dissuaded pension funds and insurers from channel-ling as much money into net-zero modernisation programmes as it would like.Its planned changes would allow more investment ca

280、pi-tal to shift from bonds to wind farms,for example.Critics of the current rules argue that they make it easier for insurers to invest in coal mining than in renewable energy.Keen to demonstrate a benefit of Brexit,the government has called for an“investment big bang”and is targeting the insurance

281、industrys considerable coffers.Having dis-cussed the matter for the past year,ministers are thought to be close to agreeing reforms with the sectors regulators,with a focus on main-taining safeguards for insurers and policy-holders.But this overhaul lags a similar ini-tiative already afoot in Brusse

282、ls to unlock 90bn(76bn)in EU insur-ance assets.The European Commis-sion has adopted a comprehensive review of its insurance rules,known rules-driven,inflexible and bur-densome”body of regulation would be slimmed down and adjusted to better suit the nations public investment needs.“EU regulation does

283、nt work for us anymore.The government is determined to fix that by tailoring the prudential regulation of insur-ers to our unique circumstances,”he said.“We have a genuine oppor-tunity to maintain and grow an innovative and vibrant insurance sector,while protecting poli-cy-holders and making it easi

284、er for insurance firms to use long-term capital to unlock growth.”The reform package has been developed by the Treasury along-side the Bank of Englands Pruden-tial Regulation Authority(PRA),which has emphasised the need for maintaining effective measures to ensure that firms and their poli-cy-holder

285、s arent exposed to any more risk as a result of the changes.In December 2021,the Banks gov-ernor,Andrew Bailey,stressed that the PRAs prime focus would be to safeguard their interests.Address-ing the Institute and Faculty of Actuaries at the time,he added:“Reforming Solvency II is sensible,because t

286、he world moves on and because it was never well suited to some aspects of the UK market.”Planned reforms include a sub-stantial reduction in the risk mar-gin,including a cut of between 60%and 70%for long-term life insurers and the more sensitive treatment of credit risk in the so-called matching adj

287、ustment.The risk margin calculates the reserves that life insurance firms must hold and the matching adjustment protects against price volatility,incentivising investors to back secure long-term assets.The risk margin and the matching adjustment are two key areas of scrutiny,according to Bailey.“Pub

288、lic policy objectives like safety and soundness and poli-cy-holder protection are the bed-rock of prudential insurance regu-lation,”he said in his speech.“But lets not assume that the answers to the question of how much of it we should have are obvious.That said,I cannot emphasise enough that we mus

289、t come up with well-considered answers to the question of how much protection?to allow prudential regulation to do its job effectively.”As well as giving insurers more flexibility to invest in long-term assets,the reform package includes reductions in their administrative burden and reporting obliga

290、tions.Charlotte Clark,director of regu-lation at the ABI,believes that immediate reforms to Solvency II are“vital to ensure that we have a post-Brexit regulatory regime thats fit for purpose for the UK and not overly restrictive.It should enable more investment in green infrastructure and the levell

291、ing-up agenda.Analysis shows that 95bn could be freed up if sensible chang-es are made to the matching adjust-ment and the risk margin,while upholding high levels of protection for policy-holders.”The government is due to publish a full consultation document in April.This should feature more detaile

292、d proposals with supporting analysis.The Pension Insurance Corpora-tion(PIC),which holds more than 47bn in investments,agrees that the Solvency II framework for insurance companies has ham-pered the UKs investment in low-carbon projects so far.In December 2021,the PIC pub-lished a research report en

293、titled Investment Unleashed,which argued that flaws in Solvency II reg-ulation had incentivised life insur-ance firms to invest primarily in large,well-funded companies.This had,the report stated,skewed investments towards mature tech-nologies and sectors,rather than helping the government to achiev

294、e its goals with respect to building greener infrastructure and level-ling up the British economy.“The governments levelling-up and net-zero ambitions require sig-nificant investment if they are to be achieved.Quite simply,the gov-ernment itself cannot provide this funding,”the report states.The PIC

295、s chief executive,Tracy Blackwell,views the planned Sol-vency II reforms as a chance to rewrite the script.“We have a once-in-a-lifetime opportunity to chan-nel new investment into communi-ties across the UK,building high-quality homes,decarbonising our economy,creating jobs and lev-elling up,”she s

296、ays.Clark agrees,noting that the ABI has“long been calling for the mean-ingful reform of Solvency II.The changes being discussed will not diminish the high regulatory stand-ards that are rightly placed on insur-ers and long-term savings providers.These will retain their ability to withstand a one-in

297、-200-year shock.”“Our sector recognises the cru-cial role it has to play in tackling climate change the ABIs Clark continues.Calling for regulatory reforms to enable more investment in renewable energy,as well as other infrastructure needed to aid the UKs transition to net zero,is just one aspect of

298、 the many actions we are taking.”Westminster is raring to revoke EU-based rules that have deterred insurers from investing in its flagship projects.Will deregulation put firms and their policy-holders at greater risk?shomos uddin via GettyImagesPeter ArcherThe changes being discussed will not dimini

299、sh the high regulatory standards that are rightly placed on insurersHustle from Brussels:the UKs race to bid Solvency II adieuSOLVENCY REQUIREMENTS AROUND THE WORLDSolvency Capital Requirement ratio of insurance markets in Europe in 2020,by country Reforming Solvency II is sensible because it was ne

300、ver well suited to the UK marketas Solvency II,so that insurers in the bloc can scale up long-term invest-ments in Europes recovery from the Covid crisis and the impacts of Rus-sias war against Ukraine.EU insurers will be incentivised to increase long-term capital investment to boost member states e

301、conomies,but at the same time the industry will be better scrutinised,according to the commission.Westminster is keen to push ahead with its plans,because the UK would be put at a competitive disadvantage if Brussels were to enact its proposed reforms first.In February,the economic secre-tary to the

302、 Treasury,John Glen,revealed the governments plan to shake off some of the shackles of Sol-vency II,which the UK had adopted when it was an EU member state.He outlined the proposed changes in a speech at the annual dinner of the Association of British Insurers(ABI).Glen said that the overhaul would

303、create a more bespoke and dynam-ic regime,unlocking billions for infrastructure investment.But he stressed that safeguarding the financial stability of insurers and protecting policy-holders would remain a top priority.British insurers have been sub-ject to Solvency II since it was introduced in 201

304、6 to harmonise regulation across the EU.Glen pledged that this“EU-focused,Commercial featurensurers are the doctors of the economic world.They assess and heal financial loss just as a doctor assesses and treats med-ical need.But,while the medical pro-fession promises to do no harm,the insurance prof

305、ession has no equivalent Hippocratic Oath.Is it now time for insurers to take responsibility for the risks they insure?Is it time for insurers to make an oath to do no harm?Some activists argue that it is,and some insurers agree;just look at those that are exiting coal or refusing to insure mining c

306、ompanies.But,says Peter Mansfield,partner at RPC,a UK law firm:“Insurers are only just starting to face up to the growing complexity of environmental,social and corporate governance(ESG)demands.We need a wider debate on what it means for insurers to do no harm.”Doing no harm is the fundamen-tal aim

307、of ESG.The central message is that companies must do no harm to the environment,to society or to a companys own governance.Yet,this interpretation of ESG sits uneasily with shareholder theory,which argues that the only duty of a company is to max-imise value for its shareholders.“At the heart of ESG

308、,you have this paradox,”says Mansfield.“It is ostensibly about ethics,yet it aligns with shareholder theory,on the back of research that showed that ESG policies generated greater returns for shareholders.”Is ESG about ethics or about profit?This matters because do no harm is already a tricky concep

309、t to pin down.To burn fossil fuels is clearly harmful,but to suddenly stop would create a differ-ent type of harm.Nor is there universal agreement on the best route to a uni-versally acknowledged good,such as net zero by 2050.“Its not always clear who should make the decision on the best road to tak

310、e,”says Mansfield.Insurers need their own Hippocratic OathDoes insurance have a role to play in setting the ethical standard for corporate ESG and promoting a do no harm philosophy?Some would say that insurers should make that decision and should drive the future by withdrawing its support from cert

311、ain industries.But insurers have traditionally been enablers of the corporate world,leaving it to govern-ments and regulators to make those big,directional calls.Its innovation and creativity have always been directed towards the products that facilitate an industry,without passing judgments on the

312、conduct of that industry.That is not to say insurers should be blind to cultural change or moral relativity.“Of course,insurers must deal with the world as it is,”says Simon Laird,global head of insur-ance at RPC.“But they must also be cognisant of upcoming change,and it is by understanding the worl

313、d as it will be that insurers can help smooth the corporate path to cause the least amount of harm.”Perhaps the most appropriate role for insurers,therefore,is to be agents of evolution.While insuring the pres-ent,insurers must also create prod-ucts to insure the future.For exam-ple,each stage of th

314、e transition to net zero will involve new risks and new products.The insurance of geother-mal finance risk,of coral reefs and of solar generation are already coming to the fore.These are new products that will hasten the transition.Those insurers who anticipate our future will benefit not only their

315、 sharehold-ers,but their grandchildren.In this sense,insurers are changing from the reactive industry of old.“By sharing the weight of the changes that are to come and being agile enough to respond quickly with new and innova-tive solutions to support this changed world,the industry can speed up the

316、 process of transition,”says Laird.“Thats a role that brings insurers on to the global stage,helping companies move forward on issues as complicated but as urgent as climate change.”Should the insurance industry adopt its own Hippocratic Oath?Yes,yes and a thousand times yes.But an oath to do no har

317、m is not the same as making a moral judgment about what harm is.It is the corporate worlds responsibility to evolve to meet the challenges ahead and it is the insur-ance worlds responsibility to hasten,and not to harm,that evolution.Simon Laird,global head of insurance,+442030606622Peter Mansfield,p

318、artner,+442030606918IInsurers are only just starting to face up to the growing complexity of environmental,social and corporate governance(ESG)demandsR E G U L AT I O NT3GermanyCyprusDenmarkSwedenAustriaSpainItalyPolandEuropean TotalBelgiumHungaryCroatiaFinlandLuxembourgPortugalSlovakiaIrelandIcelandLatviaUK EIOPA,202132.72.62.52.42.42.42.32.32.22.12.121.91.91.81.81.71.6