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Liberty Specialty Markets

Insurers 'failing to keep up with customers'

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Customers in Australia and globally want more comprehensive and dynamic insurance products but are not getting them because of the tepid response from insurers, a new report claims.

There is a significant gap between what insurers are offering and what customers are demanding to protect against a growing list of emerging risks, according to Capgemini's annual World Insurance Report.

Threats such as increased frequency of natural catastrophes, cyber, geopolitical tensions, depletion of non-renewable resources and trade protectionism are fuelling demand for better insurance protection.

More than 55% of customers globally are open to trying new models but just over a quarter of insurers are willing to tread this path, the report says.

In the commercial lines space, less than half of insurers say new offerings for rising natural catastrophes and cyber threats are being driven by the risk landscape.

It’s a similar story in the personal lines sector.

“Emerging risk trends and rising customer expectations are dramatically changing the landscape for insurance, and providers must be agile in how they respond,” Capgemini CEO Financial Services Anirban Bose said.

“This research shows a coverage gap in areas of emerging risk, but also highlights an important opportunity for insurers. Those that can evolve their products through technology, collaborate with innovators, and think of themselves as partners and preventers to their customers, stand to benefit the most.”

Less than 15% of personal policyholders and fewer than a quarter of commercial clients believe they have comprehensive coverage for emerging risks.

With cyber risk, for example, only 3% of individuals and 18% of commercial customers feel they are well insured.

Insurers are missing out if they don’t adapt and improve their pipeline of offerings.

“The fact that only a small percentage of insureds believe their current policies cover emerging risks comprehensively is cause for concern,” the report says.

“When we study these insurer opportunities, we [find] that the pace of product development and the pipeline of new offerings hasn’t caught up with current-day realities.

"Agility will be critical if insurers want to seize these opportunities.”

The World Insurance Report covers the life and non-life insurance sectors, and is based on research in 28 markets including the following Asia Pacific economies: Australia, China, Hong Kong, India, Japan, the Philippines and Singapore.