Industry needs to innovate and change as new risks emerge – Marsh

The insurance sector needs to understand that the new risks faced by clients will require innovation and structural change to be tackled.

That was according to Martin South, president and chief executive of broking giant Marsh, who felt the industry was not yet achieving the changes and innovations required to meet the needs of clients.

South was speaking at the Airmic annual conference in Edinburgh where he discussed factors driving risks and the industry’s response to them.

When asked about the need for insurers to innovate, he felt that there were products on the market that had not changed despite risks evolving and said they needed to be understood more.

“When you look at where we stand, with the exception of say cyber cover which is fairly new, the products that the industry offers have not changed since the world industrialised, but the risks are different,” South said.

“What need to happen is for the industry to really get into the deep layers and understand those risks, using real data and analytics.

“It would give insurers the chance to adjust their products and that might include some catastrophic risks if they can be understood.”

Supply chain

South went onto speak about supply chain pressures, which has been an issue for the industry in recent years.

”We all know the pressure which has been placed on supply chains in recent times,” he said.

”However, if you look at what we offer, there is contingent BI, which some insurers have been seeking to scale back over concerns around exposures.”

He added that, in general, ”products need to evolve and that may well mean they will replace some existing covers”.

”That worries some. We are still too much focused on the structure rather than helping the client,” he said.