In this time of non-stop technological change and new business models, both insurers and entrepreneurs need to stay on top of trends if businesses are to be adequately protected. “The business world is changing at a speed we have never seen before,” says Arnaud Collinet, Vice President of Commercial Lines at Intact Insurance. “We need to be constantly on the lookout for the emergence of new risks.”
What’s more, in 2018 business owners and executives are better informed and more demanding than ever, adds Nathalie Morin, a Director of Commercial Lines at Intact.
Experts point to five major underlying shifts that are changing the way business leaders and their insurance companies need to prepare for the unexpected.
Speed and ease of use
The Internet has made fast responses and user-friendly interfaces commonplace, and today’s entrepreneurs expect things to be easy to use and practically instant. Their expectations of insurance are no different, whether it’s buying a policy or tracking the claim process. And insurance companies are working to make their policy wordings simpler, taking out some of the legal language and fine print. “The idea is to improve the overall customer experience, from end to end,” Ms. Morin explains.
But making things simple should never mean sacrificing security, Arnaud Collinet stresses, noting that the relationship between the insurer and the entrepreneur is based on trust. “While we are simplifying our processes, we need to keep the insured entrepreneur feeling confident and guarantee that our services reflect all the protection they expect.
Cyber risk and technological advances
Twenty years ago, nobody had ever heard of “cyber risk”. Today, the expression can make business owners break into a cold sweat, knowing they need to protect their customers’ personal information from hackers and data breaches.
Moreover, as the technologies that run computers and industrial equipment change substantially every two or three years, companies must protect themselves against their obsolescence, says Nathalie Morin. “With the advances in robotics and artificial intelligence, coverage that replaces equipment with new generation models is becoming the norm,” she says.
Globalization of markets
The explosion of imports and exports has led insurers to create numerous insurance products designed to protect not only goods in transit, but also companies’ general liability.
“More and more companies are links in global supply chains,” Nathalie Morin explains. “Let’s say a small business imports fish from Asia and turns it into fish cakes, which it then exports to Europe. If someone in the importing country comes down with food poisoning, the company must be protected from lawsuits and also be able to sue the fish supplier or any other supplier that may be the source of the problem.”
Globalization is also making liability insurance much more complicated, because the laws that affect legal proceedings and damages are different from one country to the next, notes Arnaud Collinet. “Business owners need coverage for all these things.”
Hurricanes, tropical storms, floods, droughts so extreme they cause devastating fires… Climate events are keeping insurance companies and business leaders ready for anything. “Last year, we saw 134 billion dollars of insurable losses resulting from natural disasters”, Mr. Collinet points out.
In Canada, water damage is now the leading cause of insurance claims, dropping fire to second place. “The severity of heavy precipitation events, both rain and snowfall, is putting pressure on buildings and infrastructure”, explains Arnaud Collinet.
The sharing economy
Uber instead of a taxi, Airbnb for a hotel, Turo to rent a car from an ordinary individual: these are success stories in the “sharing economy”, in which individuals or companies make goods and services available to others on a collaborative basis. These business models are not going to go away, and they are forcing insurance companies to review their ways of doing business. “We need to not only provide insurance for the property being shared, but also cover its use and the individuals who use it,” Arnaud Collinet says, adding that Intact has staked out a leading position in this market segment in Canada.
Mr. Collinet continues: “Since these people are exchanging goods and services with strangers, they need to feel protected, on both sides of the transaction. Solid insurance coverage is part of what is needed to build the trust that is essential for the sharing economy to operate.”
No matter what business sector your company works in, many potential problems can be avoided by keeping up to date on the new risks that may affect your business in the not-so-distant future. The world is changing, and insurance is evolving.