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. Having an impact in the `New Better’ will no longer be about offering the right product, but about advice and holistic solutions that will give organisations greater clarity and confidence,” said Anne Corona,chief executive officer, Asia Pacific, Aon

Health (Medical Trend Rates)

AON in its “2022 Asia Market Review” has said medication-related expenses experienced some of the largest inflationary increases.The normalisation in utilisation patterns, emerging mental/musculoskeletal health risks and the potential for a greater COVID-19 cost burden will fall on the private sector.

This will require employers to carefully analyse their medical plans and employee needs, as cost pressures increase, said the report.

Employee Wellbeing and Wealth Solutions

Linking employee financial wellbeing to existing employee benefits drove perceived value. Foregrounded by volatile investment markets and rising inflation, monetary policies and regulatory settings will tighten, having impact on bond yields and employer pension accounting liabilities, noted the report.

Life expectancies will continue to increase due to wealth and healthcare improvements, as will above-inflation healthcare costs.

“As traditional industry borders fall away in 2022, ecosystems and the digital platforms that enable them will continue to influence the future of business. Having an impact in the `New Better’ will no longer be about offering the right product, but about advice and holistic solutions that will give organisations greater clarity and confidence,” said Anne Corona,chief executive officer, Asia Pacific, Aon.

Human Capital Risk

There will be a greater need for companies to deploy lead analytics to understand their workforce and implement programmes that build workforce agility and resilience. Although companies are maintaining flexibility as they bring employees back on site, determining the right working model is a multifaceted process based on various factors, said the report.

Financial Institutions

Deployment increased in credit insurance for project finance transactions aimed at sustainability-linked projects.
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.

Digital Economy

Global supply chain disruptions and unprecedented increases in technology adoption caused major chip shortages, which are likely to continue into 2022. Increased investment in AI, automation and 5G deployment is likely, even as global supply chain challenges persist.

Many digital economies will permanently adopt remote working or a hybrid model, which will help with the tech talent crunch.

Trade Credit

Inflation will lead to tightening monetary policy. Leveraged, weaker companies may struggle with increased finance costs. Insolvencies are forecasted to increase by 15 percent to 30 percent globally in 2022, as government support tapers.

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, a significant expansion in lending capacity for the IP market is expected, with increasing demand from borrowers.

Mergers & Acquisitions Transaction Liability

As pharmaceuticals, renewable energy, technology and biotechnology markets continue to attract investors, claims activity is likely to increase. Although M&A pricing will increase in relation to Warranty & Indemnity (W&I), premium rates are expected to stabilise somewhat in the new financial year.

“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, said Corona .

The volatility of the last two years has brought the interconnectivity of risk into sharper focus, making risk management even more critical. 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 Caron.