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2017 risk predictions: Legal eagles cast their eyes over insurance industry
Written by Deborah Ritchie
Connectivity and the ethics around data processing, cyber-related business interruption, Brexit and regulatory developments – including the practical implications of the Insurance Act – are just some of the key risk areas highlighted by a report as concerns for the sector over the coming year.
These are the findings of international law firm DAC Beachcroft’s 2016/17 'Insurance Market Conditions & Trends' research, published today, which features the key issues and topics that the firm's insurance experts predict are likely to have the greatest impact on the insurance market over the coming year and beyond.
To mark the tenth year of its publication, this year's edition reflects on the legal landscape ten years ago and considers how insurers can prepare for the next decade, highlighting the importance of scenario planning and the need to focus on 'critical uncertainties'.
"Many business planning strategies focus on 'critical certainties', which are usually high impact but do not come as a real surprise," explains head of insurance at DAC Beachcroft, Helen Faulkner. "Predictions in this category include the impact of legislative and cyber developments, terrorism, and the socio-demographic challenges of an ageing society.
"What is harder is predicting the 'critical uncertainties', as they tend to be broader, less clearly defined issues, but the ones that can have the most dramatic effects," she continues. "The future of the global economy and technology fall into this category – the hardest to predict but with the greatest impact. Where will the FinTech revolution take us, for example, and how will artificial intelligence (AI) affect both legal services and the insurance industry?"
Brexit also features in the report, with experts from the firm's regulatory team noting that, while Brexit is probably the single dominant issue for the insurance market at the moment, it should not overshadow other issues and topics.
"A key question is what UK financial services legislation will look like following Brexit," the firm's Mathew Rutter says. "We think the answer is that it will look very similar to the way it does now. There seems little reason to expert a bonfire of regulation immediately following Brexit. For some in the market, however, the risk of the loss of passporting means that they will need to move quickly to put alternative arrangements in place."
The November issue of CIR Magazine will feature a Q&A with head of insurance at DAC Beachcroft, Helen Faulkner Click here to be notified upon publication