Insurance industry's take on its biggest risks is changing

What keeps insurance workers up at night?

If you turn the clock back a year, UK and Ireland professionals would have pointed firmly at Brexit – with vast uncertainty over the UK leaving the European Union and what that would mean for business. However, a new LCP analysis of early Solvency II disclosures across 50 insurers in the region, suggests that times have changed.

Whereas 60% of insurers identified Brexit as a key risk last year, that number is down to 30% this time around. By contrast, cyber risk has surged up the charts – noted by 52% of firms in this report, compared to 46% a year earlier. Climate change has seen the most eye-catching growth, however – rising to 46% from 18% a year ago.

Unsurprisingly, the coronavirus is also weighing on minds. ‘Unanticipated coverage’ where insurers find they face claims for risks not previously believed to have been covered in policies is very much front and centre for concerned companies. Eighty-five per cent (85%) mentioned COVID-19 and its possible impacts on the claims experience as a key risk – although, encouragingly, 52% said they did expect to meet regulatory capital requirements despite the pandemic. The remaining 48% remained silent or said there was too much uncertainty at this time to offer confirmation on the issue.

“This analysis provides an interesting early view into how COVID-19 has shifted the insurance landscape,” said Cat Drummond, a partner in LCP’s insurance consulting team. “Concerns around the impact on claims experience and investments are rightly top of the agenda. The impact of the pandemic will have severe fallout for a number of business lines including travel, business interruption and income protection.”

Source: Insurance Business UK