How brokers can navigate the challenge of covering new tech | Insurance Business New Zealand
Recent questions around cover for emerging technologies have prompted more and more customers to seek broker advice, with many finding that their policies offer no cover for their most expensive technology. Drones, e-bikes and high-tech sports equipment have recently reached the spotlight as some of the areas in which insurers are seemingly lagging behind the trends, with customers potentially footing expensive bills as a result of insurers being unwilling to take on these unfamiliar risks.
According to Seneca Group’s commercial insurance broker Sam Kerr, understanding this complex area involves a lot of personal knowledge development, along with the ability to assess which insurers are ahead of the curve.
“The hardest challenge is that there is often very little understanding of these brand new industries, and even some of New Zealand’s largest insurers have been very slow to respond to the risk,” Kerr told Insurance Business.
“It’s not uncommon for us to identify a brand new risk– for example, a client doing something with a drone that insurers and brokers haven’t seen before – and that will then take a lot of underwriting to get to a point where cover is actually appropriate. There is a certain amount of tailoring and advice that has to come into that from the broker’s side, it’s not a simple case of ‘here is the product, and here is your solution’.
“When it comes to things like drones, the risk falls somewhere between traditional aviation brokers and general insurance brokers,” Kerr explained. “But the aviation brokers don’t want to deal with something that’s significantly smaller than a standard aircraft, and general brokers see it as an aviation risk. Seneca Group got into the area as a result of having both general insurance and aviation expertise, so we thought it was something we were well-placed to understand.”
Kerr says the brokerage regularly has commercial clients with home and contents policies enquiring about their options when it comes to insuring new technology. The trick then becomes identifying those insurers that would be willing to tailor a policy to cover that new risk, which is something insurers are looking at in more and more depth.
“There are some very smart insurers that have made simple extensions to cover things like drones, and there are others that don’t currently offer anything,” he said. “It’s always a bit of an arms race between insurers to figure out what’s actually happening out there in the market, and to then create a policy that is easy to underwrite and will suit people’s needs.
“As a broker, there is also a certain amount of professional development that you undertake yourself. Our team has read through articles and looked at overseas solutions, and we’ve analysed our own claims experiences. If you do that, you can find the right insurance partners to work with.”