Aon Risk Solutions Australia chief executive Lambros Lambrou said the future success of the insurance market will come from its ability to innovate by anticipating and meeting client needs in an evolving risk landscape.
Mr Lambrou said despite some negative commentary, “commercial markets are in good shape and continue to return healthy profits, largely off the back of a year with fewer natural catastrophes and additional losses”.
He said that rather than just banking their profits, insurance companies should be using them to “develop innovative products for traditionally uninsurable risks”.
Cyber network security and privacy insurance policies, Mr Lambrou said, were good examples of product innovation in recent years.
“Five years ago, organisations were completely exposed to cyber risk - the insurance market just did not cater to this very real and constantly evolving risk,” he said.
“Now the market offers specialist cyber risk insurance policies to adequately mitigate risk, opening itself up to an entirely new segment of the market that was up until recently uninsurable.”
Mr Lambrou said there have, however, been some variations in profitability across different types of insurance, according to the Aon Global Risk Insight Platform, a propriety database of insurance placement data.
“For example, despite intense competition and surplus capacity keeping premiums flat across the board in general liability, those with bushfire and offshore energy exposures are a marked exception,” he said.
“Rates in these areas have hardened in the last year, and this is expected to continue.”
Mr Lambrou said workers compensation was “another line to buck an otherwise favourable claims trend”.
“Both the volume and the value of Workers Compensation claims are on the increase,” he said.
“This means that clients with poor loss histories will inevitably be asked to take on more risk themselves.
In terms of director's and officer’s liability, Mr Lambrou said supplementary traditional and non-traditional capital has created an oversupply, pushing premiums down while the total amount of compensation claimed is on the rise.
