Home / Daily / Restart accidents among COVID emerging risks
9 June 2021
The COVID-19 pandemic has generated new emerging risks, including the potential for large industrial accidents as mothballed operations are restarted, Swiss Re says in its annual Sonar report.
The virus is also increasing longer-term health burdens and worsening income inequalities, while government support measures shoring up “zombie” companies that would otherwise fail are introducing challenges in deciding which firms are insurable risks.
Swiss Re Chief Risk Officer Patrick Raaflaub says few could have predicted the magnitude of COVID-19’s impact when it first emerged.
“Many of the actions taken to mitigate the pandemic have themselves created new risks, from the widening inequality gap to the dangers of restarting under-maintained industrial operations,” he says.
“It is essential that we have the best possible understanding of these emerging risks. It is also important to remain vigilant on the emerging risks that are already known, especially regarding climate change, as these will impact us for years to come.”
The report identifies nine new emerging risk themes, grouped according to high, medium and low impact and according to timeframes of within three years or further ahead. Swiss Re also spotlights trends relevant for the insurance sector.
Risks from restarting suspended operations are potentially high impact, particularly in the petroleum, mining, power and chemical industries, with the start-up phase of a mothballed facility a known time of acute risk.
“Across many industries, as a savings measure, the choice has been to mothball facilities rather than use the downtime for maintenance,” Swiss re says. “In addition, qualified and experienced staff have either been laid off and/or, due to restrictions on mobility in lockdown, not able to travel to sites of work.”
Similar issues apply in other industries, such as aviation, where planes will come back into service as demand for air travel picks up.
Swiss Re says the immediate management of the COVID-19 crisis will have longer-term consequences that cascade over realms, from public health to economies to society, with the result that insurance covers may be triggered or protection gaps detected.
Income reductions due to the pandemic threaten the recent growth in insurance demand seen in many markets and places an emphasis on the development of affordable solutions to fill the protection gap for middle and lower-income groups, it says.
Other emerging issues in the Sonar report include possible impacts from the rising popularity and increasing sophistication of “all-singing, all-dancing” health tracking devices.
Potential exists for faulty data or algorithm-bias to generate inadequate health advice, while liability and privacy issues present reputational and investment risks.
Lack of diversity in product safety testing is identified as a risk with implications for liability and recall claims, with car crash test dummies modelled on the average male highlighted as a case in point.
Swiss Re says the recent Beirut explosion has reinforced the dangers of storing, producing or transporting hazardous materials in or around settled areas, while modern slavery regulations and company commitments may particularly affect firms with complex global supply chains.
“Identification of exploitation could lead to large liability claims, in particular with respect to director & officer covers,” it says.
Electric scooters and micro mobility risks are seen as a low-impact emerging issue as their increasing usage outpaces regulatory responses and their popularity raises questions for insurers.
“Insurers need to consider potential impacts on existing covers and opportunities from new e-mobility offerings,” Swiss Re says.