22 Jun RISK MANAGEMENT: WHAT WILL THE FUTURE OF FIRE, MARINE, AND CASUALTY INSURANCE BRING?
The insurance industry continues to remain a mainstay business opportunity and trusted port of call for many consumers (ourselves included), providing financial protection against the risks associated with various types of damage, loss, and liability. Three important branches of the field to keep in mind are fire, marine, and casualty insurance, which cover losses related to (you guessed it) fire, ocean shipping, and personal injuries, respectively. As the world continues to change and evolve, the future of these insurance sectors is rapidly evolving as well, as we often remind keynote speaking audiences. Let’s take a closer look at how they’re trending.
After all, for example, the future of fire insurance is growingly being impacted, for one, by the increasing prevalence of wildfires. Climate change has contributed to more frequent and severe wildfires in many parts of the world, and as a result, insurers will need to adapt their policies and pricing models to account for the increased risk of wildfire damage. For example, insurers may require homeowners in high-risk areas to take steps to mitigate the risk of potential hazards e.g. by clearing brush and maintaining fire-resistant roofing materials. Insurers may also introduce new policies that provide more comprehensive coverage for related damage, including the cost of evacuation and temporary housing.
In the marine insurance sector, technological advances are quickly turning the tables too. See, for example, the increasing use of autonomous vessels and other advanced technologies in the shipping industry, which could reduce the risk of accidents and cargo loss. However, these same technologies also introduce new risks and liabilities, such as cybersecurity threats and liability for accidents involving autonomous vessels. Insurers are going to need to adapt their policies and underwriting practices to account for these new wrinkles… and may need to develop new products specifically tailored to the needs of the shipping industry.
Blipping over to the casualty insurance sector, changing consumer behavior and attitudes towards risk are likely to be important factors in the years ahead. For example, the rise of the gig economy and remote work may lead to changes in the types of liability risks faced by employers and employees. What’s more, changing societal attitudes towards liability and responsibility may lead to shifts in the types of claims filed against individuals and businesses. Insurers will have to consider how changing societal norms will change policies and packages, and may need to develop new products that better address the needs of gig workers and other non-traditional employees.
And then there’s the elephant in the room in the form of increasing use of data analytics and artificial intelligence (AI) in underwriting and claims handling. These technologies allow insurers to more accurately assess risk and price policies, as well as to detect and prevent fraudulent claims. However, the use of AI also raises ethical concerns about data privacy and bias, and insurers will need to be proactive in addressing these concerns to maintain consumer trust.