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Innovation opens new markets

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Commercial insurers are finding new ways to take on risks once seen as difficult or impossible to cover, according to the latest Swiss Re Sigma report.

“Product development and innovation around data and data analytics have expanded the scope of insurance solutions to a wider range of threats… and made risk transfer more efficient,” the report says.

“In addition, companies are using novel insurance solutions to protect earnings, reduce cashflow volatility and support business strategy and growth.”

New risk areas include unpredictable weather, political instability and energy price shocks.

The industry’s willingness to push the boundaries of insurability gives it the opportunity to take part in the fast-growing sharing economy, the report says.

“Car or home sharing is based on trust. Liability and reputational risks arise when that trust is broken or misplaced.

“In particular, liability in the sharing economy is complex and potentially challenging to allocate between the different parties involved.

“Insurance can be an important tool to enhance the trust and should be seen as an expense to create value in an intangible asset, similar to marketing or advertising.

“New covers supporting these business models are becoming available.

“The evolving solutions for the sharing economy constitute a mix of property, liability, reputational and cyber risks.”