Insurers challenged to innovate on new risks

A major broker has challenged insurers to capitalise on favourable market conditions by expanding their offerings to cover more risks.

Aon’s latest Australian Insurance Market Update shows the abundance of investment capital is likely to keep downward pressure on premiums in many markets, which Aon Risk Solutions CEO Lambros Lambrousays creates opportunities.

“For the insurance market, the big question becomes: when will it genuinely start using profits derived from the relatively benign claims environment to develop innovative products for traditionally uninsurable risks, rather than simply banking the difference?” he says.

Citing cyber risk as an example, Lambrou says the most successful insurance companies will be those who anticipate clients’ needs in an ever-changing risk landscape and innovate to meet them.

“Five years ago organisations were completely exposed to cyber risk,” he says.

“The insurance market just did not cater to this very real and constantly evolving risk. Now the market offers specialist cyber risk insurance policies to adequately mitigate risk, opening itself up to an entirely new segment of the market that was up until recently uninsurable.”

The Aon report found competition was at an all-time high, particularly in the SME segment, citing the fact that there more than 40 insurers actively trying to expand their penetration into the SME professional indemnity market.

Aon Risk Services Australia Chief Broking Officer Ben Rolfe says competition is also extremely strong in the property insurance market.

“The resulting good news for businesses is that premiums have tumbled over the past six months and continue to fall,” he says.

“Savings will be available to the vast majority of businesses, and accounts which are claims-free and well-managed in terms of risk will achieve better than market average results.

“With increasing competition, reduced demand and insurer budget pressures there will be potential to test the boundaries around coverage. To get the most out of this market, it will pay businesses to talk to their broker as soon as they can to set a robust strategy for renewal.”

To download the full report, click here.