Insurance & Claims Are Changing with the Times, But for the Better?
London Market insurers must be quick to react to technology developments – such as automation and increased cyber security risk – if they are to successfully navigate the future claims landscape, according to BLM and the Institute of Directors (IoD).
The assertion is amongst others released in volume two of BLM’s Macroeconomic Trends Series, a suite of research papers created with economists at the IoD. The papers look at macroeconomic forces and how they will shape the insurance claims landscape in the London Market. The second paper looks at technology risks through the lens of product liability, motor, employers’ liability and technology-specific claims.
Tim Smith, partner at BLM who co-led the writing and insights within this paper said: “We have a thriving technology sector in the UK, but given changes ahead we foresee significant knock-on effects on a number of traditional markets. The pace of technology advancement can leave entire industries playing catch-up, which is why it’s so important for the insurance market to understand the impact these will have and adapt accordingly.”
Jim Sherwood, partner at BLM and co-leader of the paper said: “From our work across the London Market with insurers, brokers and managing general agents, we know the importance of understanding how emerging risks will impact the volume and nature of claims. We hope this paper will provide the market with a better understanding of what’s on the horizon and how technology will continue to affect all aspects of insurance.”
The paper also argues that employers’ liability (EL) insurers must react to the growing use of automation and increased self-employment.
Malcolm Keen, associate at BLM said: “Whilst disputes continue as to the definition of an ‘employee’, changes in the nature of employment are affecting the pool of those who can potentially be compensated for an injury or illness by an EL insurer.
“We’ve seen significant rises in self-employment in the UK, with a million more workers since 2008 opting to ‘be their own boss’, and technology is playing a key role in enabling this. On top of that. the increased use of automation will likely to affect the profile of the UK labour market in the short, medium and long-term.
“Coupled together, we expect this may shrink the extent to which the financial burden of injuries or illness caused by work is borne by insurers.”
The Macroeconomic Trends Series will continue to cover other other key claims categories for the London Market in the coming months. This is the second series of papers from BLM and the IoD, with these volumes building on the trends and reflections last identified in 2016.