Insurers and brokers need to be ready to help customers understand the complexity of emerging risk needs, Zurich’s Global Chief Underwriting Officer Inga Beale says.

Speaking this morning at the Steadfast Convention in Melbourne, Ms Beale said risks are increasingly interconnected and many are “truly global”, which makes them more complex for insurers.

“Think of the financial crisis,” she said. “What started in one small corner of the American subprime mortgage world morphed into a global crisis and worldwide recession.

“It’s not more risks, but different risks that insurers need to help customers understand and manage.”

Ms Beale says emerging challenges bring plenty of opportunities for the insurance market and for brokers.

Insurers can only help mitigate 5-10% of the risks customers face, and need to take a longer-term approach to helping clients so they can prepare to meet future challenges. 

“The risk landscape we are interested in is very, very narrow,” she said. “We need to be more holistic in our approach. We need to look at the whole landscape, where insurances will be needed that we don’t even know about yet.”

Zurich is part of the World Economic Forum’s Global Risk Network, which publishes the Global Risk Report. Ms Beale says although the network has identified hundreds of risks, insurers and brokers need to understand how many of them are interconnected, such as events that result from economic disruption or rising prices and shortages of commodities.

Insurers and brokers need to look at risks over a longer period and put more effort into research and development that will enable them to meet future needs, she says. For example, this approach would enable them to start collecting data now to price such emerging risks as losses from future water shortages.

“There is great opportunity for the insurance industry,” she said. “We just have to think about how we can enhance what we give our customers.”

Ms Beale says clients also need to be educated about new threats. She told insuranceNEWS.com.au Zurich launched a supply chain product that operated regardless of whether clients suffered physical damage, but found only a handful of customers were interested.

She believes this will change following the Japan earthquake and tsunami, as customers experience the supply chain disruption impact on the rest of the world.

The Global Risk Report has identified five emerging risks: demographic challenges from ageing populations putting a strain on social stability; resource security where there is a threat of higher prices and shortages; cyber security; retrenchment from globalisation; and weapons of mass destruction.