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May 14, 2019

Consumers are worried their insurance has become insufficient

By Patrick Brusnahan

Consumers are worried about a “coverage gap in areas of emerging risk”, according to the World Insurance Report 2019.

The report, published by Efma and Capgemini, stated that policyholders are increasingly concerned that their coverage has become insufficient for a world of emerging risks.

The World Insurance Report 2019 shows that there are significant gaps in emerging risk areas. Moreover, these areas can include anything from cybersecurity to environmental threats.

Under 25% of business customers across all geographies, and less than 15% of personal policyholders, feel they have sufficient coverage for emerging risk. It’s not only consumers that feel unprepared. Fewer than 40% of life and health insurers said that have built a pipeline of new products to cover emerging risks comprehensively.

83% of personal insurance customers have medium or high exposure to cyberattacks. Among business customers, 81% are at risk to escalating employee healthcare costs and only 17% are well covered. In addition, 87% of them are at risk or cyberattacks with only 18% insured. Furthermore, almost 75% are threatened by rising natural catastrophes, but only 22% are efficiently covered.

However, over half (55%) of customers are ready to explore new insurance models. The problem is only 27% of insurers are investing in them.

In terms of sharing data, 37% of customers were willing in exchange for improved risk control and improved services. Yet again, the sector came up short and only 27% of insurers had the ability to do that.

Things are improving, according to the World Insurance Report 2019. A large chunk of the sector (57%) have leveraged AI, machine learning and advanced analytics. On the other hand, only 29% have implemented automated risk assessment and a mere 20% use real-time insight generation from IoT devices.

“Emerging risk trends and rising customer expectations are dramatically changing the landscape for insurance, and providers must be agile in how they respond,” said Anirban Bose, CEO of Capgemini’s Financial Services Strategic Business Unit. “This research shows a coverage gap in areas of emerging risk, but also highlights an important opportunity for insurers. Those that can evolve their products through technology, collaborate with innovators, and think of themselves as partners and preventers to their customers, stand to benefit the most.”

“This research shows that the future for insurance will be partnership-centric,” said Vincent Bastid, Secretary General of Efma. “Insurance providers need to collaborate with partners who offer high levels of expertise in areas from AI to advanced analytics. Simultaneously, they must partner more closely with their customers to provide the more responsive, demand-driven service many are seeking.”

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