Mike Kerner, CEO of general insurance for
Zurich Insurance Group, has shared his views during a visit to the company’s Australian arm on what he sees as exposures on the increase and how he thinks the biggest technological trends will impact the industry.
Kerner said there were increased incidents of extreme weather with occurrences of hail and flood for example resulting from two phenomenon, climate change and urbanisation.
“Which is to say many more big cities coming together, people gathering in spots and total insured value being gathered in specific areas.
“And that urbanisation has tended to happen in places that are actually relatively hazardous.”
He cited these as cities being on coastlines, or rivers or earthquake fault lines.
“These exposures are out there and as an industry, these are incidents and events that we need to be able to deal with because our customers are counting on us to help them get back and put back together after such incidents take place.”
Cyber risk was the other major increased exposure Zurich sees which was also very challenging.
“It’s almost impossible to build the walls high enough to keep the bad guys out and permeable enough to let the good guys in.
“So we’re working with our customers to understand how to deal with those risks.”
Kerner said the coverage was ‘relatively limited’ however, as otherwise it would be prohibitively expensive, but companies had to initiate action themselves before that could change.
“I think this market will evolve. But it actually starts with companies who need to be doing more to really set up the firewalls, to encrypt their data, to do the various things that need to be done to make their operations more cyber-resilient.
“That’s the starting point of the process and then, I think, the rest of the market will come together.”
Kerner also discussed how the company had been spending a lot of time thinking into the future with trends such as the driverless car really accelerating and becoming the norm just like other seemingly radical safety measures such as seatbelts and airbags have now become.
“We expect to see that kind of technology really make broad progress over the course of the next decade, and lots of planning going on as to what that all means and how that all interacts with the various systems in both insurance and in society in general.”
Tied in with this was the ‘internet of things’ which would impact on lots of risks, Kerner said.
Sensors that could detect leaking pipes and more sophisticated theft or fire detectors which would help homes become safer.
“These will help, as we partner with those customers, the insurance industry deliver those kinds of safety measures to customers,” Kerner said, adding that it was interesting that the industry had the reputation for very little innovation.
“In reality, there’s a lot of innovation that happens, and I think it’s going to accelerate going forward as we see these technologies really ramp up, and the ability of the insurers to work with customers and be a lot more customer-focused about delivering the product in a way works well in terms of keeping losses under control and avoiding, frankly, a lot of the problems that cause customers to have issues in the first place.”
*Read what Mike Kerner thinks banking and big data can offer the insurance industry in Friday’s newsletter.
