A lack of underwriting discipline, more robust market regulation, exposure management deficiencies, and growing global interdependencies are threatening re/insurers with a “new era of liability,” according to analysts at Russell Group.
In a new report, the risk modelling firm argued that global interdependencies fostered by corporate connectivity, the Internet of Things (IoT), and Industry 4.0 are creating new risks for re/insurance companies and their corporate clients.
Additionally, it claimed that current risk mitigation practices in the global specialty insurance and reinsurance markets lack sophistication and fail to address the issue of how businesses might plan for and respond to a market-turning event.
At the same time, previous major liability events such as the asbestos crisis, which severely impacted Lloyd’s of London, are moving out of the collective memory, analysts noted.
Based on regulatory reports focused on casualty underwriters and senior managers, Russell Group believes that re/insurers are not doing enough to address the complexity and dangers embedded within the class.
“We need to build a more robust risk management framework that can be extended to insurance underwriting for new forms of liability risk,” the report stated.
It recommended a marriage of C-suite sponsored investment in new forms of liability modelling and data-led bottom up underwriting inputs.
These, the firm suggested, can benefit companies and help them identify vulnerabilities in their organisation.