Disruption was the theme of Aon’s 11th Advanced Risk Finance Conference in Melbourne last week.

More than 350 executives, company directors and professionals attended.

Aon Risk Solutions Australia CEO Lambros Lambrou says the insurance industry is “at the forefront of disruption”.

“Changing market conditions have led to a significant change in the type, level and accessibility of insurance cover; emerging risks, particularly cyber and terrorism, are becoming increasingly important,” he said.

“The cost varies significantly, as does the level and scope of coverage and, as a result, has produced relatively soft market conditions and a highly competitive market.

“Aligned to this is the introduction of new market entrants and the abundance of alternative capital from hedge funds and super funds, as well as traditional reinsurance companies competing on a direct basis.”

Delegates were warned the disruption phenomenon – such as the “on-demand economy”, the impact of technology, the breakdown of barriers to entry and the arrival of new competitors challenging traditional business models – will break the status quo in “the coming months and years”.

Mr Lambrou told insuranceNEWS.com.au disruption is receiving more attention at board and business leadership levels, with growing recognition that innovation is the key to meeting the challenge and exploiting opportunities.

“We’ll start to see chief innovation officers pop up across the business community and we’ll see more companies putting money aside to invest in disruption activities,” he said.

“You can’t sit on the sidelines and hope disruption will go away. The question that insurance companies will need to ask is: how do we embrace this, how do we create better products and services for the customer, how do we improve the customer experience?”

Aon Risk Solutions Chief Innovation Officer Stephen Cross says disruption is forcing businesses to reconsider the role of innovation.

“Innovation is a strategy; it’s not about sitting under a tree waiting for an apple to drop on your head,” he told insuranceNEWS.com.au. “There’s going to be an expectation [among stakeholders] that companies have proven innovation strategies and that they are investing real, hard dollars in innovation.”