The COVID-19 pandemic presented many challenges to the global insurance industry, most notably with regards to coverage under business interruption (BI) policies, which saw a substantial upsurge in claims. In contrast, liability lines of insurance were often not affected as severely as anticipated.
Insurance plays an important role in enhancing resilience to cyber threats, which are rising as a result of digitalisation and growing hacker capabilities. The market for standalone cyber insurance has expanded sharply in the last few years, but the dynamic nature of cyber risk requires insurers, businesses and governments to constantly evaluate and update their approaches to cybersecurity.
Low population health is associated with reduced economic prosperity, and medical expenses can plunge people into poverty, especially if unexpected. Insurance is a key tool used to manage health risks, facilitating access to and usage of healthcare services and protecting against financial shocks should a health issue arise.
Digital technologies are changing the way we work, live and interact. Advances in data analytics and AI technologies offer huge promise for the insurance industry in particular, with their potential to streamline processes across the value chain, accelerate the shift towards mitigation and prevention services, and facilitate greater personalisation of products. Making the most of these opportunities and ensuring they keep pace with the latest developments, however, will require insurers to step up their innovation efforts.
Physical climate risks associated with extreme weather events are increasing due to climate change.
Insurance relationships are fundamentally built on trust between insurers and their customers. Customers trust that insurers will act in ways that ensure their solvency and that they will promptly pay claims when they are due; insurers in turn trust that policyholders will make sure to minimise their risk after signing a policy and that any claims they make will be genuine. Certain shifts such as digitalisation, however, may pose a threat to customer trust as concerns around data privacy, misuse of information and bias or discrimination arise.
Special issue summary
By providing underserved, low-income populations with protection against risks to their livelihoods and health, microinsurance helps poorer segments of society increase their resilience to adverse events. Despite significant development in many emerging markets in recent years, however, large protection gaps remain, many of which have been and will continue to be exacerbated by COVID-19.
Cyber risk is one of the most pertinent global threats facing the world today. With firms’ and individuals’ reliance on technology only set to increase, the frequency and severity of cyber incidents is likely to rise in turn. The cyber insurance market is set to undergo significant growth in the coming years, accelerated by increasing levels of liability and data protection regulation.