Growing insurance products lack data
Business is waking up to the reality of risk in the digital world. Sales of insurance for cyber-threat and reputation damage are increasing, but what data are these policies actually based on? The fact is that there is very little reliable data, so insurers and businesses have to rely on a fair bit of guess work with underinsurance a likely outcome. Obviously as cyber risks become better analysed, with increases in actual incidents, the information we are working with will become clearer, but for now risk managers and insurers need to dig a bit deeper to assess the scope of the threats. Experts say that many businesses are insuring against far smaller financial losses than would actually be the case; perhaps they are underestimating the risk of an attack, or do not understand the potential complexity of recovering from one. For reputation insurance, policies often focus on costs such as hiring PR experts and additional advertising rather than a financial loss, as the level of lost sales, for example, is not easy to estimate. Read the full story.
Risk management failures blamed for death
Poor risk management controls may have been blamed for contributing to the death of a worker at an Australian mine. The incident occurred last year when the worker, Jeremy Junk was being hoisted in a lifting structure, and looked over the edge to communicate with a colleague. His head then struck the bottom of a platform. A report into the incident found that although documentation for the procedure stated that all body parts should be kept inside the confines of the lift, it was not given the correct level of importance and not specifically stressed as a potential for personal injury. Additional, an assessment test did not seek to ensure workers were aware of this risk. There were other factors in the incident which included the extremely long hours worked by Junk in a number of shifts prior to the one where he was killed. The report highlights the importance of rigid and thorough risk management in high risk industry. Read the full story.
Flooding high priority for homeowners
It’s impossible to not have noticed that our weather has changed over the years. At one time severe weather incidents were seen once in a typical Canadian’s lifetime, now there’s at least one in a decade. Rainfall has increased by double-figure percentages and the cost of insuring homes against floods is increasing. Where once the greatest risk to a property was fire, now it is more likely to be flooded. The cost of natural disasters last year ran into many billions of dollars and we’ve already seen storms causing major damage this year. The Insurance Bureau of Canada is testing a new online tool that will help insurers to assess the potential risk of flood to individual streets. While there is no suggestion that this tool will be available to homebuyers, an insurance policy quote would give a good indication of the risk. The IBC says that premiums will be rising and limits of cover will be restricted. Although overland flood insurance has not been available in Canada, a small firm in Calgary is looking to change that. The Beaufort Group normally deal with energy industry insurance but are offering a limited number of policies to owners of flood-prone homes. Read the full story.
Environment risk cover working well in Europe
Insurance Europe has published a briefing note relating to environmental liability coverage across the European Union, based on a survey of its members. The survey revealed that the market is functioning well, and that there is enough market capacity to expand the amount of environmental liability cover available to the market, should demand increase. The briefing note also notes that an EU wide compulsory environmental liability insurance system would not benefit customers and has the potential to stifle the current promising level of product innovation in member states. Read the full story.
Lloyds publishes new minimum standards for managing agents
Lloyd’s has published a set of new minimum standards for managing agents, in line with good market practice and relevant Solvency II requirements. These replace the original version, in operation since 2005 and are the result of more than a year of consultation. The new standards will be in force from the beginning of 2015 and there will also be standards in relation to conduct risk, which will be published later this month. Read the full story.