Property/casualty and other insurers face a number of new emerging risks, and they’re not necessarily what, or where, you’d think.
Technological issues relating to smart cities, plant pathogens that threaten rubber production, concussions in sports, e-cigarettes and cloud computing security are among 26 rising issues of concern that Swiss Re cites in a new report on the matter.
“Such newly emerging risks need to be monitored and managed,” Philippe Brahin, head of Swiss Re’s group Qualitative Risk Management and a report co-author, said in the document’s introduction. “Possibilities for solutions are vast, and the insurance industry should expand its role of mitigating emerging risks and enabling society to advance further.”
Here’s a round up of some of the major risks Swiss Re cited in the report.
Smart cities. The world is changing, and so are cities, with the increase used of advances such as “self-steering systems” that can manage resources, waste, traffic and transportation.
Cities are also increasingly using digital technology to handle everything from solar and wind energy production to water use.
But these systems include sensors, webcams, GPS, mobile phone and Internet data that can cause citywide shutdowns if they fail or there is a power outage. Data privacy also comes into play, Swiss Re said, and all the electromagnetic fields generated by this technology lends itself to safety risks.
Plant pathogens and rubber production. As Swiss Re pointed out in its report, rubber is used in everything from car and airplane tires to glue, seals, surgical gloves and more. Aircraft tires in particular are only made with natural rubber.
But rubber production involves major risk because 90 percent of natural rubber is produced at commercial rubber plantations in Asia. Right now, there is a fungus that causes leaf blight on rubber trees that is found in South America, but Swiss Re said that observers believe it will almost certainly spread to Asia.
The risk-laden end result: Asian rubber production shortfalls and a major shortage of natural rubber. Such an occurrence could cause major business interruption losses in agriculture covers and more, Swiss Re noted.
Concussions in sports. Swiss Re framed the issue as a major liability concern, with potential increases in workers compensation, personal accident and liability claims. The reinsurer cites the National Football League and Riddell, the NFL’s official helmet manufacturer, and the National Hockey League as major targets of an increasing amount of concussion-related liability lawsuits.
Swiss Re pointed out that the NFL, NHL, and college football lawsuits in this area are mushrooming. In the United States alone, between 2.6 million and 3.8 million sports and recreation-related traumatic brain injuries take place each year, according to Center for Disease Control and Prevention statistics cited by Swiss Re’s report.
The number is growing, and Swiss Re expects more concussion claims over time from other professional sports and amateur sport associations. The fear is also that the sports concussion-related lawsuits will go global.
E-cigarettes. Swiss Re said that the product could eventually be proven to be more harmful than experts currently think, with potential links to respiratory or other health problems, and a risk of increased mortality rates. If that comes to pass, a lawsuit surge could erupt that rivals tobacco claims from years gone by, according to the report.
The product is an electronic inhaler that behaves similar to a regular cigarette, but it is powered by battery, and it vaporizes a liquid that is enriched with nicotine.
As Swiss Re pointed out, the product is marketed as a safer alternative to tobacco and a tool to help people move away from smoking. Some health experts worry that the e-liquids are toxic, can harm children and are even a workplace hazard.
In the interim, The European Union is regulating how e-cigarettes are used, and the U.S. Food and Drug Administration wants to expand its regulatory authority over the product as it does with regular tobacco.
Cloud computing. This is a technology advance that is increasingly common in both personal and professional life. As Swiss Re explained, shared access to sites that store mass amounts of data may be efficient and cost effective for cloud computing business and personal clients, but the risks are growing.
Risks associated with cloud computing include internal data loss, partial business interruption, data corruption, data theft, cloud computing provider liabilities, and reputational damage risks—assuming confidential client data is lost through this technology.