The insurance market is experiencing significant instability due to inflation, the global pandemic, evolving cybersecurity risks, and climate change. According to experts at Send’s INFUSE webinar titled Navigating the Hard Insurance Market, innovative technology and creative product design could be key in bringing stability to this challenging environment. Rising Risks and Challenges The growing frequency of weather-related disasters has especially made risk assessment difficult for insurers. Tandis Nili, managing principal of global risk management at Epic Insurance Brokers, highlighted that underwriting has struggled to keep pace. “Weather patterns are changing rapidly, and the underwriting models we’ve relied on are no longer sufficient,” Nili remarked. The traditional methods of predicting risks, based on past events, are no longer applicable as 100-year events are now happening much more frequently. Leveraging Technology for Stability Martina Conlon, executive principal at Datos Insights, emphasized the importance of utilizing automation and artificial intelligence (AI) to address this volatility. AI-driven predictive models, she explained, can assist insurers in making more accurate risk assessments, which in turn leads to better pricing and more efficient processes. “It’s all about moving beyond traditional tools like spreadsheets and policy systems,” Conlon said. By integrating more advanced technology, insurers can streamline operations and enhance accuracy in their assessments. Creative Product Innovation Another critical aspect in managing the hard market is innovative product design. Jennifer Kyung, CEO of NextGen Underwriting, discussed the opportunities for insurers to rethink product structures. This could involve adding new lines for emerging risks or restructuring existing products to share the responsibility between insurers and clients. For example, home insurance policies could evolve, particularly in regions facing heightened risks due to climate change. “This is a real opportunity for underwriters to creatively design products that better align with future risk landscapes,” Kyung added. Preparedness: A Key Lesson Lastly, the past few years have highlighted the need for insurers to be prepared for the unexpected. While it’s impossible to predict future events, the industry can ensure that it has the right tools and capabilities in place to respond swiftly and effectively when crises arise. As Kyung put it, “We may not predict what’s coming, but we can be ready for whatever it is.” Conclusion In today’s volatile market, insurers must embrace both technological advancements and creative product design to navigate the evolving risk landscape. By doing so, they can enhance stability, build consumer trust, and be prepared for future challenges.
