Organisations with better ability to tolerate risk, and with well-articulated submissions to the market, will have the competitive edge when it comes to accessing insurance coverage, said the report
Cyber Threat:
Insurance premiums and retentions increased sharply while appetite and capacity saw a downturn in 2021 , the most challenging year yet for the cyber insurance market. Exposure to ransomware was a key concern.
Aon’s Asia Market Review Several markets introduced new questionnaires to better understand exposures or imposed co-insurance and sub-limits on ransomware-related losses.
Organisations with better ability to tolerate risk, and with well-articulated submissions to the market, will have the competitive edge when it comes to accessing insurance coverage, said the report.
Though dominated by the COVID-19 pandemic, there were other significant developments in 2021: emerging markets which are poised to become global growth drivers, the skyrocketing availability of data, advances in digital and mobile technology, and galloping progress in analytics and artificial intelligence, commented,Anne Corona, Chief Executive Officer, Asia Pacific, Aon
As traditional industry borders fall away in 2022, ecosystems and the digital platforms that enable them, will continue to influence the future of business.
“We believe that impact in the new normal will no longer be about offering the
right product, but about advice and holistic solutions that will give companies greater clarity and confidence,” she added.
Digital Economy
2021 saw many Asian digital economies announcing public listings, with organisational readiness and regulatory compliance playing a major role in their success.
Global supply chain disruptions and unprecedented increases in technology adoption caused major chip shortages, which are likely to continue into 2022
Several major e-commerce sites in Asia suffered large scale data breaches that exposed personally identifiable information belonging to millions of customers.
Cyber risk was one of the key drivers of losses and was further complicated as governments implemented stricter regulatory regimes.
Organisations in this industry should ensure thorough risk assessment of vendors and fulfilment of contractual responsibilities, said the report.
Financial Institutions:
There has been some increase in the frequency of fraud losses across the region, as the large commodity fraud losses of the last two years continue to play through the credit insurance market. The threat of ransomware and other cyber crime has all the financial institutions on high alert, not just for their own risk profiles but also for the consumer base, said the report..
Deployment increased in credit insurance for project finance transactions aimed at sustainability-linked projects.
Cyber red teaming and adversary simulation attack strategies became more common across Asia.
Larger banks will continue to focus on the impact of climate change on lending portfolios, investment strategies, regulatory reporting, shareholder expectations and broader stakeholder communications in their keynote messaging.
Technology Communications and Media
Additional capacity entering the market will have positive impact for buyers across most product lines. Headwinds remain for financial lines, albeit without the level of volatility seen in 2021.
All eyes will be on China while Supply chain disruption will impact upstream technology, communications & media manufacturing Businesses must align cyber security strategies with Intellectual Property risks.
Mergers & Acquisitions Transaction Liability
As pharmaceuticals, renewable energy, technology, and biotechnology markets continue to attract investors, claims activity is likely to increase.To alleviate financial losses from high-value transactions businesses must implement risk transfer mechanisms, such as tax liability insurance and litigation risk solutions to enhance M&A transactions.
Businesses should also explore the strategic benefits of W&I insurance utilisation and how it can accelerate negotiations. Although M&A pricing will increase in relation to W&I, premium rates are expected to stabilise somewhat in the new financial year Intellectual Property
New analytics tools, artificial intelligence (AI), and machine learning, are available to help Risk Managers leverage their IP assets as collateral in borrowing, so as to benefit from a non-dilutive, competitively priced source of capital.
“In 2022, we are set to see a significant expansion in lending capacity for the IP market, with increasing demand from borrowers,” said Aon’s report.
Businesses need to understand how to optimise the conversion of innovation into specific IP asset classes, as IP becomes a more valuable means to drive their businesses forward in an increasingly innovation-driven economy.
The volatility of the last two years has brought the interconnectivity of risk into sharper focus, making risk management even more critical, explained Carona.
“Businesses are now more open than ever before to map current and underrated risks against their risk appetite early on, embracing better strategies to protect their organisations from volatility. We are also seeing the focus shift from event-based to impact-based risk assessments,” said Carona.