Do insurance coverage corporations have to “press the case” for charge will increase?

“I do anticipate four major themes that we can expect in the insurance industry,” stated Richard Clarke (pictured above).

One of those themes, he stated, is the necessity for insurers to “press the case” for charge will increase with each their private {and professional} strains prospects.

Clarke is chief insurance coverage officer at Colonial Surety Company, a US insurance coverage agency with a deal with enterprise legal responsibility insurance coverage and with different choices together with surety bonds and constancy bonds.

Clarke has greater than three a long time of trade expertise. Insurance Business requested him to anticipate what the worldwide trade can count on in 2024.

First, he provided reflections on the 12 months that was.

Reflections on 2023: Nat cats and cyber threats

“2023 brought to light a handful of big insurance challenges,” stated Clarke. “The heightened impact of natural disasters highlighted recurring difficulties in underwriting responses to claims, especially in large property claims.”

Underwriters face quite a few challenges when nat cats strike. According to on-line sources, a few of the key points embody the amount of claims, restricted sources, the issue verifying knowledge and the complexity of assessing injury, significantly its extent.

One reply to those challenges is investing in expertise to enhance efficiencies. One of Clarke’s roles is main insurance coverage technique and operations, together with constructing out his agency’s on-line platform right into a one-stop-shop for SMEs.

However, globally, insurance coverage expertise is challenged by cyber threats, stated the chief insurance coverage officer.

“We also witnessed cybersecurity take centre stage as the rise and threat level of cyberattacks continues to peak,” he stated. “It goes without saying that a cyberattack has a great financial and reputational impact on a business.”

Clarke stated addressing the “unique and evolving risks associated with cyber threats” has put extra strain on insurers’ underwriting operations and pushed them to have interaction in further and specialised underwriting efforts.

“This means insurance companies had to reassess their resources and potentially add insurers to try to pinpoint risks,” he stated.

Insurers limiting coverage language

Another international trade development Clarke seen in 2023, he stated, was how insurers’ use of extra restricted language on coverage paperwork exerted an affect on some exposures.

“Insurance policy language restrictions are exerting an influence on management liability exposures,” he stated. “Typically, due to insurers implementing limitations in response to substantial claims payouts.”

Four insurance coverage themes for 2024

In the 12 months forward, Clarke expects the worldwide trade’s challenges to be pushed by “four major themes.”

1. Understanding synthetic intelligence

The insurance coverage chief stated it’s vital for insurance coverage firms to know the impression AI can have on the trade, significantly on underwriting and the sale of insurance coverage merchandise.

“Once we understand the impact we can work to integrate them into our daily practices,” stated Clarke.

“Dealing with unanticipated events is nothing new in the insurance industry,” he stated. “However, in 2024 it is important to acknowledge that continued exposures, such as natural disasters as well as machinery malfunctions, can happen and that these exposures can morph into risks.”

Clarke stated insurance coverage firms want to have the ability to navigate these dangers with a view to present the required help to their prospects.

After a 12 months of rising prices because of international inflation, Clarke argues that it’s more and more vital for insurers to “press the case for rate increases” amongst each private and industrial strains prospects.

“This is important because the public is becoming increasingly more fixated upon the cost and not necessarily the underwriting justification for writing costs,” he stated. “This can be a major challenge for insurance companies who may have to raise their rates as costs continue to increase.”

Clarke additionally stated social media’s recognition as an “information platform” will be problematic for insurance coverage corporations.

“At times this can hinder the underwriting process when consumers turn to social media to understand insurance policy pricing,” he stated. “[Insurers] must learn to properly navigate these platforms to ensure their processes are completed properly.”

Governance challenges

In an interview with IB final 12 months, Clarke additionally mentioned governance points. He stated administrators and officers (D&O) underwriters at the moment are challenged to raised perceive the businesses they work with, as these rising points in governance — together with cyber and ESG — blur the boundaries of protection.

What do you see as the largest challenges for the insurance coverage trade within the 12 months forward? Please inform us under.