Rising tide of resilience fatigue needs to be tackled – Beazley

Insurers have been told they need to work with their corporate clients to find solutions for the growing levels of “resilience fatigue”.

Specialist insurer Beazley’s has said institutional burnout has become a real threat, particularly in pandemic exposed sectors such as health, travel, education and hospitality.

In its new report, “Spotlight on Business Risks” found that business leaders believe they are more resilient as they move into 2022, but 34% still place business risks as their top concern for the year.

It added although most organisations have leveraged the pandemic to improve operations from the ground up leading the vast majority (84%) of business leaders to believe they will be more resilient in 2022, high levels of optimism do not, however, mean that business risks have gone away.

Indeed, over a third (34%) of business leaders in the US and UK believe that risks in this grouping – which include supply chain, business interruption, boardroom (director failure), reputation and employer risk (looking after staff through and post COVID-19) – will be their top concern this year. Reputation risks still remain a small concern, just 13% say it is their top worry, but the threat continues to rise with ESG reporting – one more reputational issue that business needs to consider.

Bethany Greenwood, group head of cyber and executive risks at Beazley said the risk landscape continued to be a challenge for businesses across all sectors.

“We are already seeing supply chain issues impacting property claims, with a possible overspill into technology product liability claims,” she explained. “We also see scope for COVID-19 issues driving Directors’ & Officers’ liability (D&O) claims. Employment liabilities will also rise as staff raise concerns about how they were supported under remote working or whether they are being treated fairly going forward. Finally, social inflation, already a scourge on casualty markets, could become super-charged by such concerns as pandemic pressures risk encouraging jury members to believe ever more extreme redress measures are warranted.

“Against this backdrop, clients will want improved granularity around how insurance will respond, and the industry will want to be clear it is not inadvertently including COVID-19 risk in policies.

“As the liability landscape continues to shift and expectations of our industry rise, the value of closer and more responsive insurance partnerships that focus as much on risk management and mitigation as on traditional risk transfer, will become increasingly evident.”

Greenwood added: “As companies continue to face having high proportions of their workforce off sick or isolating as we move into 20221, insurers are starting to ask what might be the possible impact of ‘resilience fatigue’ on our customers across every sector in 2022.

“Although most organisations have leveraged the pandemic to improve operations from the ground up and the vast majority (84%) of business leaders believed they would be more resilient in 2022 as a result, high levels of optimism do not mean that business risks have gone away.”

Looking to claims Greenwood said the outlook remained difficult.

“Against this backdrop, there can be little doubt that the complex and highly integrated risk environment will drive a sharp rise in claims severity, with settlement amounts far exceeding previous levels,” she added. “And as this threat grows, clients will likely demand improved granularity around how insurance will respond – the industry will want to be clear it is not inadvertently including COVID-19 risk in policies.

“As the liability landscape continues to shift and expectations of our industry rise, the value of closer and more responsive insurance partnerships that focus as much on risk management and mitigation as on traditional risk transfer, will become increasingly evident.”

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