By Kerri Hamm | EVP, Head of Cyber Underwriting, Client Solutions, and Business Development, Munich Re US

Amid increasing changes in climate, rapid technological developments, and economic pressures, the insurance industry and its customers are confronting and adapting to a host of challenges.

As (re)insurance professionals, we focus on understanding and providing solutions that address the challenges our clients find truly meaningful. To do this, we must dig into risk concerns across the entire insurance value chain — from consumers to carriers — putting ourselves into our clients’ position provides us with valuable insights. By understanding the risks that span multiple market segments, we can foster meaningful dialogue and develop innovative solutions that benefit society as a whole.

In collaboration with the Insurance Information Institute (Triple-I), Munich Re US developed RiskScan 2024 to offer a view of risk concerns for key target segments from inside and outside the insurance industry.

A total of 1,300 individuals representing five US-based P&C market segments were surveyed about their top risk concerns. Consumers, small business owners, middle market decision-makers, agents/brokers, and insurance carriers were asked to rank their top concerns related to Insurance Risks, Natural Disasters, Emerging Technologies, P&C Insurance Costs, and Market Dynamics.

What stands out is both the P&C insurance industry and the individuals and businesses they insure share the same core concerns. All are worried about the health of the US economy and getting back on their feet after a disaster, whether physical or man-made (e.g., cyber incident), occurs.

Cyber incidents, changes in climate, and business interruption encompass top insurance risk concerns overall.

Consumers, businesses, and the insurance industry all face significant cyber threats. From businesses who are at risk of customer data breaches to digitally connected homes, we are now in a world of ever-evolving cyber risks. Risk from changes in climate is driven by consumers, while business and insurance professionals identify business interruption as a top-of-mind issue.

Businesses are vulnerable to loss events such as extreme weather, cyberattacks, and supply chain issues that could potentially disrupt their operations. All businesses are challenged with building resiliency while diversifying their supply chains in a post-pandemic, rapidly changing connected world.

Furthermore, there is a clear difference in the distribution of risk perception. Consumers highly ranked only a select number of risks — tangible ones like severe weather and cyber threats such as data breaches, that compromise their privacy — whereas insurance professionals maintained a more balanced mindset that considered both immediate risks like changes in climate as well as emerging risks, such as artificial intelligence (AI) and per- and polyfluoroalkyl substances (PFAS).

When it came to the most pressing natural disasters, all audiences are concerned about frequent, immediate non-peak (secondary) perils such as thunderstorms, tornados, and floods. Of the non-peak perils, flood was ranked first or second for all segments, except consumers who ranked it fourth. With 14.6 million properties at substantial risk of flood (First Street), and pluvial flooding events occurring more often than in the past in areas that did not previously experience flooding, this is becoming one of the world’s most costly perils and represents a major insurance gap in the US.

Yet, our survey uncovered less concern about flood on the part of consumers than expressed by insurance professionals and businesses, who ranked flood as one of the top two most pressing natural disasters. This gap suggests consumers might not be aware that traditional homeowners policies typically exclude flood.

Surveys like RiskScan 2024 allow industry professionals to assess the concerns of relevant stakeholders and determine product development needs to address key risks (e.g., secondary perils, AI) or deep dive into an emerging issue that impacts everyone (e.g., PFAS). Moreover, recognizing gaps in knowledge and coverages, such as flood, cyber, and legal system abuse, provides opportunities to educate and narrow the gaps.

With a focus on prediction, prevention, and protection, Munich Re US seeks creative ways to deliver future-focused solutions, empowering you to be braver and bolder today and ensure a resilient tomorrow.

View the RiskScan 2024 report here.

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This article was produced for Insurance Business America, in collaboration with Munich Re US.