Here is your round-up of the latest insurance updates

The Rise of Climate Change: Implications for Insurance Coverage against Floods in the UAE

Violent weather phenomena, including heavy rains and flash floods, have wreaked havoc in the United Arab Emirates (UAE) and the broader Gulf Cooperation Council (GCC) region. This month's events are poised to trigger a surge in insurance claims across the motor, property, and business interruption sectors, according to a recent analysis by AM Best.

Motor insurance, particularly vulnerable to natural disasters, faces substantial challenges with significant vehicle damage from flooding. While comprehensive policies covering flooding exist, they represent a smaller market segment compared to basic third-party liability policies.

Likewise, property and business interruption insurance are now under more vigilant examination than before, with people in the region becoming more aware and purchasing insurance. The current situation has compelled insurance companies to revise their strategies, which may later lead to the inclusion of new values in their policies or fees.

As weather patterns evolve, so do the demands for more comprehensive insurance coverage, emphasizing the urgent need for adaptive measures in the face of climate change.

U.S. Cyber Insurers Saw Strong Profits, Slowdown in Premium Growth In 2023

In 2023, U.S. cyber insurers witnessed robust profitability yet experienced a slowdown in premium growth, reveals a Fitch Ratings analysis. Despite maintaining direct underwriting profits for two consecutive years, written premium volume stagnated due to intensified pricing pressures. Standalone cyber coverage displayed a stable direct incurred loss and defense and cost containment (DCC) expenses ratio of 44%, indicating sustained profitability.?

Insurers attribute this success to prior premium rate hikes and enhanced risk selection processes. Moreover, insurers now mandate stringent cyber risk management practices from clients and are tightening policy language with more frequent sub-limits and exclusions.?

Interestingly, while demand for coverage continued to rise, statutory direct written premiums for cyber coverage saw a modest 2% decline—the first on record. This shift marks a significant departure from the market's previous growth trajectory, signaling a recalibration amidst evolving industry dynamics.

How Environmental Insurance Diligence Can Shape Commercial Real Estate Transactions?

The cyber insurance sector of the United States was accompanied by remarkable profits and premium growth stability during 2023, per recent reports. Not only was the task of insurers challenging due to the increase in the frequency of cyber threats, but they still found the right way of responding to the issues.

This trend underscores the evolving nature of cyber risk and the insurance industry's efforts to adapt. As cyber threats evolve in complexity and scale, insurers reevaluate their risk models and pricing strategies to ensure sustainable growth.

While profitability remains strong, insurers face pressure from regulatory scrutiny and increasing cyber threats. This dynamic landscape necessitates ongoing innovation and collaboration within the industry to effectively mitigate cyber risks and safeguard businesses and individuals against potential losses.

Baltimore Bridge Collapse: A Wake-Up Call for Good Data Use?

The collapse of Baltimore's Francis Scott Key Bridge has underscored the critical role of data in marine insurance, prompting experts to emphasize the need for robust data utilization in the industry. Nick Evans, who is the product head at London-based Insurewave, reveals the severity of the impact stemming from the collision between the container ship and a support pillar, including the loss of lives, destruction of various properties, and then, the closure of Baltimore's port.?

The disturbance in maritime activities from the wreckage is an alarming issue related to potential cargo spoilage and subsequent insurance claims. Evans advocates for a proactive approach to data analysis, highlighting its role in helping insurers understand their exposure and prepare for large claims events. In an era where technology offers opportunities to anticipate risks, the Baltimore incident serves as a reminder of the importance of leveraging data-driven insights in navigating the complexities of marine insurance effectively.

As the industry grapples with the aftermath of the collapse, Evans suggests that such events are not as rare as once believed. By adopting data-driven strategies, insurers can better assess their risks and minimize losses in unforeseen circumstances.

Swiss Re Launches GenAI Underwriting Assistant in Switzerland

Swiss Re introduces an innovative addition to its Life & Health underwriting manual, Life Guide, unveiling the Swiss Re Life Guide Scout. This Generative AI-powered underwriting tool, fuelled by Microsoft Azure Open AI Service, aims to revolutionize the underwriting process.

In a scenario where preciseness is the key, Life Guide Scout helps underwriters with AI-based prediction models so they can promptly process clients’ data and make the right decisions. Julien Descombes, Swiss Re’s chief underwriting officer L&H Re, underscores the tool's significance in enhancing insurers' efficiency and sustainability goals.

The collaboration with the Microsoft Azure Open AI Service further enhances the tool's capabilities, providing deeper analytical insights for improved decision-making. Catrin Hinkel, CEO of Microsoft Switzerland, emphasizes the transformative potential of this collaboration, heralding a new era of risk management in the insurance market.

The pilot program, currently available in English, promises an expanded rollout, signaling a pivotal advancement in underwriting efficiency and knowledge transfer.