1.Cybersecurity

As cybersecurity practices evolve, so will the methods that are used to bypass your efforts. This creates a demand for constant vigilance and resources devoted to protecting your data. Insurers aren’t only responsible for protecting their own information, but that of companies and individuals that employ their services.

This creates the worry of covering their own company, as well as worrying about paying for losses experienced by policyholders. In certain cases, as technology evolves quickly, incidents that were not specified under a policy will fall under general coverage.

2.Climate Change

With increasing frequency, severe weather-related events are occurring across the world. These events range from fires in California and across Australia, to flooding in Japan and overall rising sea levels. As such, we’re expecting insurance companies to face increasing risks with liability and physical risks.

As incidents increase, insurance agencies must decide how to approach this growing threat through means such as adjusting policies, prices, and investment decisions. The resulting erratic and severe weather incidents are expected to become more of a normal occurrence.

3.Aging Infrastructure

As infrastructure ages and is met with increasing demand and use, insurers are exposed to new risks. Electrical grids, pipelines, bridges, all of these instances open companies up to a host of risks. Pacific Gas and Electric, for example, was responsible for several fires that started due to aging infrastructure far beyond needing upgrades. These instances resulted in destroyed homes and vehicles, other critical needs such as hospitals struggled to refrigerate medicine.

Old pipes, likewise, could cause flooding and property damage. This is a tough battle as aging infrastructure doesn’t take a break, leading insurers to gauge the risk of increased liability claims in areas where infrastructure is less than perfect.

4.Regulations and Emerging Risks

Insurers operate in a highly regulated industry. As new regulations emerge and existing regulations are adjusted, it can become problematic for insurers taking on the increased financial and reputational risk. More regulations require more resources spent on compliance and an increased likelihood of failing an audit. Add in the differences by county, state, or country, and there is a lot of work to do for establishing internal standards and policies.

As legislation changes too, different risks emerge and affect policies. Examples include states lowering the age of alcohol consumption or the legalization of marijuana.

5.Changing Interest Rates

Changing interest rate is a significant factor when determining profitability for insurers. This is because insurance companies often have fairly substantial investments in bonds or other interest rate sensitive products for customers. An interest rate drop can make insurance products less appealing, affecting sales and reducing premiums.

The overall effect of interest change on insurance companies is uncertain, depending on the direction of change and the time, but that uncertainty is a large risk.

Preparing for Risks

Overall, these risks suggest a struggle for insurers to find a balance between affordability, financial stability, and preparedness.  Using RiskWatch, insurers can continually assess a multitude of risks, helping them to achieve that balance. The RiskWatch platform will standardize and automate key risk processes, such as data collection, analysis, reporting, and remediation, allowing assessors to mature their program