Insurers told they need to step up for 2024 if they are to deliver for clients

The CEO of speciality insurance group Beazley has said that the year ahead will be the time for the industry to prove its worth as its clients face a complex web of emerging threats.

Adrian Cox, CEO warned that corporate clients have never needed the support of the industry as much as they do currently and that will only continue in the near future.

“In less turbulent times, price when purchasing insurance has often been prioritised,” he explained. “Now we are seeing a shift in attitude, which is endorsed by more than a third of the business leaders we surveyed as part of our Risk & Resilience research, who are planning to explore specialty insurance options that integrate risk and crisis management, in recognition of the mounting challenges they face.”

“With 33% of global business executives foreseeing they will be operating in a high-risk environment in 2024, as an industry now is the time for us to step up and support them.”

Beazley has used its research to highlight the threats faced by businesses with cyber remaining one of the more acute and with its set to spurn new solutions.

Paul Bantick, group head of Cyber Risks warned while there is a market, demand is still rising.

“The last 12 months have seen the creation of the market for cyber insurance-linked securities, following the first-ever cyber catastrophe bond that we launched back in January 2023,” he explained. “We hoped that this would lead to growing interest in these transactions, bringing in the additional capacity needed to meet the growing demand for cyber insurance from businesses and society. So, it has been pleasing to see other cyber catastrophe bonds get off the ground this year. As we look to 2024, we predict that we will see an increase in the number of cyber bonds launched as the market evolves, grows, and moves more mainstream.”

Bantick, added artificial intelligence will pose questions for business and their risk carriers in the coming year.

“The growth of generative AI and its use for both good and ill will continue to be the ‘unknown known’ risk in 2024,” he added. “On the back of this rapidly developing technology, our Risk & Resilience research reveals that concern over cyber risk will continue to dominate business executives’ risk agendas (27% state cyber will be their key risk in 2024).

“Based on the growth we see; we anticipate that the cyber market will triple in size over the next three to four years. To meet this demand we need a dynamic cyber market, which includes effective solutions for catastrophe risk to enable the supply of quality capacity to the cyber (re)insurance market to increase and meet the growing demand for cover.”

Beasley added that the impact of climate risks will not subside and as such those events which would have been deemed to be secondary to the major hurricane and earthquake risks are assuming ever greater importance and exposures.

“The days of the ‘secondary’ perils, such as hail, tornado, floods, wildfires etc. are quickly ending,” said Richard Montminy, global head of property risks.  “Increasingly, such risks are joining the ranks of the key ‘primary’ perils, such as hurricanes, named storms and earthquakes, as extreme weather conditions continue to be more frequent and severe.

“While exposure changes and inflation have played a significant role in driving losses up this year, there is no denying that climate change is also a key driver of this upward loss trend. The situation is reflected in our Risk & Resilience research with 28% of global business leaders we surveyed predicting climate change will be the biggest environmental risk they face in 2024, up from 18% at the beginning of 2023.

“Looking to 2024 we expect the impact of natural catastrophes to continue to change the property insurance landscape. As the property risk shifts from being commoditised to specialised, we anticipate further market consolidation and continued withdrawals from segments of the property market. The insurers that remain, and continue to underwrite profitably, will strengthen their pricing, underwriting tools and catastrophe modelling, and focus on upskilling underwriting experts in the art of anticipating the unforeseen.”