2022 has been a year of upheaval for us all, with war in Europe, rising inflation rates, chaos at the petrol pumps, soaring fuel costs and escalating climate change. Now is the time to ask, what do these risks mean for insurers and consumers in the coming months and years? AXA’s Future Risks Report 2022 examines the challenges.
For the last nine years, AXA has been compiling their Future Risks Report – a global study that examines the risks that will be affecting us in the near future. For me, after many years of building and scaling insurtechs, and now working alongside insurers, this report is always a critical read.
4,500 experts from over 50 countries and 20,000 respondents from the general public contribute to the survey that builds the report. This insight gives the insurance industry a unique view into future risks and consumer trends to help protect business stability and growth with accurate forward planning.
The 2022 report paints a worrying picture of a fragmented and overheating world where crises increasingly occur on top of each other rather than one at a time.
For us at Nuon AI, the ways in which insurers must adapt to market conditions to protect and grow product performance is our raison d’etre. With that in mind, I have pulled out the key learnings and insights from the report for insurers to be paying attention to.
To read the original full report, visit AXA Future Risks Report 2022.
Climate change is the number one risk
Climate change is finally the top concern for experts in every region – including the US, where it was the #1 concern for the first time of the general public.
The global impact humans are having on our world, its biodiversity, and its effect on our health and economy can no longer be ignored. From wildfires across the globe to floods, deforestation and habitat loss, just 14% of experts and 27% of the public say authorities are prepared for this risk.
Only
14%
of experts say we are prepared for climate change risks
The new normal – cybersecurity and health
It wasn’t so long ago when cybersecurity and health were a concern of the future; now, they’re an everyday factor of life. One aspect that has not fully been realised is a widescale cyberattack that cripples essential infrastructure.
Sure, we had the WannaCry attack on the NHS in 2017 – the largest ransomware attack ever that also affected 250,000 machines in more than 150 countries – but that was more down to vulnerabilities in Microsoft Windows. The cyber hackers got lucky that the NHS fell victim rather than attacking them directly.
However, as geopolitical tensions grow, institutions like the NHS, power grids and nuclear power plants are potential targets.
Pandemic risks have fallen to fifth in the AXA risk rank, but their survey points to issues around mental health and the ever-changing patterns of infectious diseases.
Economic risks and social tensions are rising
For the first time in the history of the future risks report, we see financial instability risks, macroeconomic risks, and risks related to monetary and fiscal policy entering the top ten. This is already having an impact on insurance product performance, with as many as one in 10 travel and pet policies being cancelled by consumers specifically the research found to save cash.
The reasons for this – a common theme for the year gone and the year ahead – are rising food and energy prices.
This has led to people being more risk averse in their daily lives as the level of trust in scientists, public authorities and the private sector has fallen. The fallout of Covid is still well and truly in evidence.
Further reading: What does AI mean in insurance?
55%
of the general public say they think the public is aware of macroeconomic risks
70%
of experts disagree…
AXA’s global top ten emerging risks according to experts
- Climate change
- Geopolitical instability
- Cyber security risks
- Energy risks
- Pandemics and infectious diseases
- Social tensions and movements
- Natural resources and biodiversity risks
- Financial stability risks
- Macro-economic risks
- Monetary and fiscal policy risks
How to stay ahead of the field
With a number of emerging and critical risks impacting insurers both from within and in the macroenvironment, embracing technology to remain competitive is essential.
“The industry is trying to modernise, and progress seems slow right now, but it’s speeding up because of external pressures…
“AI shaping the insurance industry from the outside in. Innovations happening outside of the industry are creating opportunities to develop AI-powered insurance products, or could even be said to be putting pressure on the industry to adjust.
“If, for instance, the car subscription model becomes the norm, motor insurers are going to have to find a way to respond to that.”
– Professor Andy Pardoe | The future of insurance is artificial intelligence
If you’d like to have a conversation about these emerging risks, and how technology can help your insurance product better react to complex market conditions, you can reach me here. I look forward to hearing from you.
