Cyber, regulatory changes and economic growth will bump up levels of claims, according to a new report
Emerging risks in technology and changes to regulation will increase claims severity and generate more demand for liability insurance, according to a new report by Swiss Re.
The report, Liability claims trends: emerging risks and rebounding drivers, found that weak economic growth is a key reason for benign claims but new risks and stronger economic growth will increase liability claims.
The report said cyber risk and liability claims arising from emerging technologies, such as hydrofracking and autonomous cars (vehicles capable of driving without human input), may become more prominent.
Tort reform has dampened claims severity in some markets, but the effects were a one-off benefit and will no longer suppress claims growth to the same degree, the report said.
Insurers are also concerned about the potential for risk accumulation, in which the insured losses from one event affect multiple companies, countries, industries or lines of business. “With global ever-increasing interconnectivity – via cyber links and supply chains – the risk of casualty catastrophes is rising,” explains Jayne Plunkett, Swiss Re’s Head of Casualty.
The report also warned that liability claims could revert to pre-crisis levels, stating: “Due to economic and social factors such as low inflation, low wage growth, tort reform, and improvements in medical care costs, liability claims have been lower-than-expected since 2008. Over the long term, claims growth typically outpaces economic growth and the expectation is for a return to this more normal growth path, which in turn will push up demand for liability insurance.
Click here to read the full report.