Genetic testing and 5G among major emerging risks, Swiss Re forecasts

A clash of new, digital technology with legacy hardware, new risks emerging from the roll-out of 5G mobile networks and increasingly limited fiscal and monetary policy flexibility are among a number of new and slow burning risks affecting the insurance industry.

Genetic testing and its effects on the industry, and the effects of climate change on public health are included in the Swiss Re Institute’s latest analysis of emerging risks – newly developing or evolving risks that are difficult to quantify, but potentially have a significant impact on the industry and society.

“Swiss Re and the insurance industry at large first flagged climate change as an emerging risk many decades ago”, says group chief risk officer at Swiss Re, Patrick Raaflaub. “The risk has now ‘emerged’ but associated and challenging uncertainties still remain, such as the implications on life and health insurance.”

The five risks with high potential impact on the industry are:

The meeting of new technologies and ageing infrastructure
As technology improves, the possibilities seem endless, but progress does not come cost-free. Hardware in areas of critical infrastructure, including smart electric power grids or pipelines and hospitals often remains outdated and as a consequence, insurers face higher risk accumulation and unexpected loss potential in the areas of property damage, bodily injury, business interruption and cyber risk.

The spread of 5G technology
5G is expected to enable wireless connectivity in real-time for any IoT device, including autonomous cars or sensor-steered factories. Current concerns regarding potential negative health effects from electromagnetic fields are only likely to increase. In addition, hackers can also exploit 5G speed and volume to acquire or steal more data more quickly. Major concerns are possible privacy and security breaches, as well as espionage.

Monetary policy flexibility
There is a growing consensus that another economic downturn will need a fiscal response. The re/insurance industry could benefit if changes to policy bring growth and financial stability. However, a rise in uncertainty, causing higher financial market volatility and declines in asset valuations, is a potential risk factor.

Growth of genetic testing
The cost of genetic testing has declined significantly in recent years, and with direct-to-consumer testing kits, genetic tests are now increasingly available and affordable. They have been widely adopted by public health systems and individuals. This has significant implications for life insurers, both in regard to data management and regulatory constraints.

Climate change and public health
The most pronounced risks from climate change affecting human health clearly stem from heatwaves, floods, droughts, fires and vector-borne diseases. Millions of lives and healthcare services could be at risk. Without action, mortality rates and healthcare costs could soar, with significant consequences for the health, workers’ compensation and life insurance lines of business.

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