Climate change, cyber threats, and market uncertainty challenge stakeholders
There are overlapping concerns between the insurance industry and its clients, with economic uncertainty, natural disasters, and cyber incidents topping the list.
Munich Re US, in collaboration with the Insurance Information Institute (Triple-I), has released the RiskScan 2024 report, providing insights into the top risk concerns of US property and casualty (P&C) insurance stakeholders. The survey captured responses from 1,300 individuals across five market segments: consumers, small business owners, middle-market decision-makers, agents/brokers, and insurance carriers.
The survey also underscored knowledge gaps in understanding risk drivers and insurance coverage adequacy.
Shared concerns
The survey results highlighted several shared and differing risk concerns among stakeholders. Economic inflation, domestic political uncertainty, climate change, and cyber incidents were identified as top risks by all groups.
Consumers tended to focus on tangible and immediate risks, such as natural catastrophes, while insurance professionals took a broader view, considering both immediate and emerging risks.
Munich Re also pointed to significant gaps in awareness about specific risks, including floods, cyber incidents, and legal system abuse. These gaps could leave consumers underinsured and insurers exposed to price inadequacy.
Cyber risks, climate change, and business interruption were identified as top insurance concerns across the market. Munich Re noted that consumers primarily drive concerns around climate change, while businesses and professionals are more focused on business interruption risks.
Emerging technologies, particularly artificial intelligence (AI) and the Internet of Things (IoT), were also highlighted as significant sources of risk.
Re/insurance gaps
The report highlighted disparities in how different segments view natural disaster risks. While floods were ranked as a top concern by insurance professionals and businesses, consumers placed less emphasis on the peril, ranking it fourth.
Munich Re underscored the scale of flood risk, with 14.6 million US properties at substantial risk, according to First Street Foundation. Increasing pluvial flooding in nontraditional areas underscores the need for better consumer education, as many homeowners may not be aware that standard policies often exclude flood coverage. Munich Re emphasized that bridging this awareness gap is critical.
Economic inflation and domestic political uncertainty were, meanwhile, identified as major market concerns by all segments. Inflation and the growing frequency of natural disasters were noted by Munich Re as primary drivers of P&C insurance costs. Legal system abuse was also cited by insurance professionals as a significant contributor to rising costs.
The survey findings suggest that knowledge gaps about P&C cost drivers, particularly among consumers and small business owners, may result in inadequate coverage and missed opportunities for the industry to engage and educate.
“Recognizing gaps in knowledge and coverages, such as flood, cyber, and legal system abuse, provides opportunities to educate and narrow the gaps,” Munich Re US EVP, head of cyber underwriting, client solutions, and business development Kerri Hamm (pictured above) said.
Source: insurancebusinessmag.com
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