Fix inadequate policies before innovation: AIRMIC
Insurers need to focus on improving the efficacy of current products before effective innovation of new products can be obtained says Chris McGloin, president of Airmic, the UK risk and insurance management association.
Speaking to Intelligent Insurer, McGloin says that while conversations about product development for emerging risks are happening, it is important for the industry to address complexities and inadequacies within current products first.
“There’s a lot of discussion about innovation and product development and the areas particularly that customers are focusing upon are cyber and supply chain,” he said. “Before you get to that point, you’ve got another issue to overcome, which is the efficacy of current insurance products – you’ve got to make sure that the products are fit for purpose for existing and conventional risks before you can have effective innovation for new risks.
“When you look at insurable risks as the buyer, you’re looking to effectively transfer certain risks to the insurance company. However there are barriers to robust product efficacy such as programme complexity, absence of alignment of insurance policies with business practices and policy wording issues including inappropriate conditions, exclusions, warranties, etc. These can undermine the value of the insurance policy to the client. ”
McGloin recognised that the industry has attempted to consider these challenges, but said that it is “unclear” how far brokers and insurers have attempted to right them.
“I recognise that a lot has been done to try and address this. As an example - for business interruption and supply chain – CILA recently developed a technical report to consider challenges highlighted by actual claims. Many issues were identified but it is unclear how far the brokers and insurers have looked to develop solutions to the problems.”
The full article will be published in Intelligent Insurer’s Spring issue in April, 2014.
