News

Emerging technologies – risk and opportunity

29th November 2017

The potential of new technologies is hard to deny. They enable organisations to challenge previous assumptions and to pose new questions. Innovators use them to test and learn, or to find new ways of creating value for companies and customers alike.

But with new technologies come new risks. Insurers need to consider how best to support their customers in this new world. They need to establish which categories of risk they are willing to take and which they are not. Initially, as with most new opportunities, there will be very little historic data to help with the risk assessment, so insurers must be able to adapt over time.

The emerging risks

The complexity and interdependence of the technologies embedded in future processes will bring significant risk management challenges. One major example is the continued shift of decision making from humans to technical systems. This shift offers the biggest opportunity for efficiency and cost reduction, but it is also the source of new risks.

Changes to future processes will be underpinned by a variety of key technologies. Those who choose to embrace the new options will face new risks for their businesses and will seek to mitigate these risks through insurance. Herein lies the opportunity for insurers: a multitude of emerging markets created by new technology.

We have looked at four key technologies that are taking hold across many industries. Users will look for insurers willing to offer cover for the new risks involved.

There are clearly serious risks raised by these new technologies: increased vulnerability to infrastructure breakdown, difficulties in determining liability for losses, increased possibilities of cyberattack, supply chain problems, and increased risk of business interruption.

So where are the opportunities?

As we have already discussed, technology has advanced at an accelerated pace, especially in the past couple of years, and the rate of change will only increase. This is being felt across a multitude of different industries where businesses have started manufacturing more for less. Change equates to risk, and risk is covered by insurance. These risks offer insurers the opportunity to design and market new types of cover to support the changing world.

The Insurance Market must be prepared. Some of these new risks require changes to pricing and underwriting along with the ability to keep pace with the ever-changing legal and regulatory requirements needed to govern emerging technologies.

Insurers have new markets to explore. But they must ensure that they are not exposed to excessive or unwanted risk themselves. It is a time of great opportunity for insurers who have both the appetite for change and the skills and infrastructure to evolve.


Content produced exclusively for Total Systems plc, specialist providers of insurance software for quote; rating; policy administration and claims

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