Allianz Commercial says insurers can do better job on emerging risks

The insurance industry can do a much better job to help companies deal with the evolving risk landscape, a leading insurer said during the Ferma Forum in Madrid.

Dirk Vogler, a member of the board of management at Allianz Commercial, also said that insurers need to invest more in innovation and cooperate with other stakeholders to meet the challenges brought by climate change and other trends.

“We can do a much better job,” he said. “Our models are still backwards looking, which does not help when looking at the future. We must use more predictive data.”

The comments were made during a debate with other insurance executives, who fielded questions about the difficulties that buyers face when managing risks like the energy transition, nat cats and others.

For Vogler, insurers have an important role to play but must do more to meet clients’ expectations.

“Insurers are not investing enough in innovation and there is much room for cooperation [in the market],” he said.

Vogler added that decarbonisation is one area where innovation is required. In his view, the insurance industry can do much more to promote solutions for the circular economy.

That can be done, for example, by replacing damage assets with those that have low impact on carbon emissions, such as second-hand car parts.

“There will be massive investments going into this transition in the future and we need to be able to support that with creative solutions,” Vogler said.

Lorraine Stack, managing director and risk management leader in Europe at Marsh, stressed that there are other risks emerging from the energy transition where solutions are not yet up to scratch.

One example is liability faced by executives, who are increasingly targeted by activists and other groups. Intensive ESG regulatory action is also adding to D&O exposure, she noted.

“The D&O market is fine right now compared to where we were in 2021 and 2022,” she said. “But we are seeing a noticeable increase in climate change litigation exclusions, and particularly affecting our energy clients. This is slightly worrying. There is a feeling that the insurance industry is just waiting for the waves of ESG litigation.”

Another tricky cover is political risks. Stack noted that clients have expressed concerns about interpretations of political risks policies being applied in an inconsistent manner by insurers across the world.

“This is causing some confusion for our clients,” she pointed out.

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