Liability insurers’ customer mix is changing, with the services sector dominating as manufacturing declines, Finity Consulting Actuarial Consultant Kim Nowaczyk says.

In 2001 service providers accounted for 39% of liability customers, but this has risen to 43% this year, she told the Actuaries Institute General Insurance Seminar in Melbourne last week.

“In contrast, manufacturing has fallen from 12% in 2001 to 7% this year, and trade and transport is static at 19%.”

Ms Nowaczyk says the risk profile of liability insurance is also changing. More imports from developing countries will affect product liability due to lower manufacturing standards.

“Increasing use of hired labour will also change the risk profile because it shifts the risk from the client to the business supplying staff. We will also see products having to encompass cyber, abuse and molestation, contractual liability and errors and omissions.”

Ms Nowaczyk says liability insurance is open to disruption, especially at the smaller end of the market.

“Both underwriting and pricing are areas where automation could play a role.”

Finity Senior Consultant Alice Huang told the conference claims are evenly split across property, personal injury and other types.

“But we need to look more closely at claims to understand what will happen,” she said. “Sexual abuse… and mental harm are both areas that are on the horizon for claims.

“Class actions will have a bigger impact in the future, and we are seeing this with bushfires.”

Liability insurers face further challenges, Ms Huang says.

“The premium pool has stagnated and is not likely to go up. There is also the impact of technology on the business, because people will want things done in real time.

“This will affect distribution and pricing with less complexity and high volumes.”