May was a busy month for the insurance industry both at home and internationally.
Climate change and Environmental Social Governance (ESG) has been at the top of the agenda with the annual general meeting (AGM) season in full swing.
Protesters make themselves heard
Lloyd’s was engulfed in smoke as protestors staged a demonstration outside the building for its AGM, and Scor was one of a number of underwriters using their annual shareholder gathering to announce new restrictions on the coverage of oil and gas projects, with demonstrations on both sides of the Atlantic.
The Annual BIBA Conference in Manchester also saw a demonstration as climate campaigners called out insurers and brokers who, they said, were backing a controversial African oil pipeline project.
Net-Zero Insurance Alliance beset by challenges
The month has also seen a swathe of major insurers leave the United Nation’s led Net-Zero Insurance Alliance (NZIA). At its height the NZIA had 30 members but that has fallen to 17 as companies quit amid worries over anti-trust concerns. Earlier this year attorney generals from 23 US states wrote a joint letter to NZIA members to express certain “legal concerns” over the organisation, resulting in an exit for many.
Claims under the spotlight
In the UK there are growing concerns over the hard line taken by insurers to claims.
The latest litigation claims index from Mactavish found that, as the cost of living crisis bites, insurers are becoming ever more stringent on claims resulting in a huge spike in disputes ending up in court.
The company found insurers’ tough approach to the pay out of claims pushed the Mactavish Litigation Claims Index to a new high in 2022, as increasing numbers of customers resorted to the courts to get their insurance claims paid.
The index, which uses data on the frequency of High Court claims as a measure of insurers’ willingness to pay out on insurance claims, jumped 14% in 2022 with 82 commercial insurance lawsuits filed against insurers. A wider view of the index, which includes personal injury claims, also rose 14%, to 158. The rise in the index suggests insurers are continuing to take a tough attitude to claims pay-outs, a feature of the ‘hard market’ the industry has been going through since 2019.
Mactavish CEO, Bruce Hepburn, said: “The data produced by our claims index is really worrying. It should be seen as a clear warning to companies that buying insurance ‘off the shelf’ doesn’t work, particularly where insurers are being aggressive over their interpretation of policy wordings and rejecting more and more claims.”
AI hits the headlines
The threat of Artificial Intelligence (AI) hit the headlines last month with senior figures from technology giants collectively warning that the system had the potential to threaten the future of humankind.
This was quickly followed by a warning from Swiss Re, which released a study that found the more digitally advanced a country is, the less people trust artificial intelligence. Germany, France, the UK, Canada and the US are in the top 20 most prepared for AI out of 120 countries. Trust in this technology, on the other hand, is comparatively low in these advanced digital economies, with only a third of respondents on average in each country understanding and trusting AI. The most AI-trusting people hail from emerging digital growth markets such as India, Nigeria, Mexico, Indonesia, Philippines and Argentina.
According to the analysis, which is part of Swiss Re Institute’s latest report ‘Decoding Digital Trust: A consumer perspective’, digital trust is influenced by a variety of psychological factors including cultural and generational attitudes, trust in institutions, incidence of online fraud, ease of use and understanding of technology such as AI. The report also delves into how technology such as sensors and AI/automated decision-making is closing the gap between the real and online worlds.
Pravina Ladva, Group Chief Digital & Technology Officer of Swiss Re explained: “As the insurance industry increasingly improves its value chain with advanced analytics and different forms of AI, creating digital trust is essential. What is surprising in ‘Decoding Digital Trust: A consumer perspective’ is that countries with advanced levels of digital infrastructure have relatively little trust in AI. This really underlines how important it is to be transparent with customers, truly understand their needs and deliver on them. The safety, security and efficiency of online engagements is paramount, especially in the insurance industry where customer relationships are built on trust.”