Aon said it would collaborate with analytics company Praedicat on developing a range of specialist liability reinsurance products and services that address product liability risks including nanomaterials and 5G.
Specifically, they’ll focus on “named peril” products for insurers, helping them to transfer emerging liability risks to reinsurers and the capital markets.
The collaboration aims to address reinsurance coverage gaps arising from emerging risks, and to encourage the development of a robust casualty catastrophe market that could offer new and diversified exposures to the reinsurance and insurance-linked securities sectors. The collaboration will target the general liability and directors’ & officers’ (D&O) market for both current year and historical policy year exposure, to provide clients with tailored solutions.
Reinsurance products to address large-scale emerging liability risks, such as casualty clash, have often been seen as too expensive by cedents, while reinsurers may view there to be overly broad exposure, the collaboration announcement notes. By tailoring the coverage to a defined list of emerging risks on a named peril basis, the products are expected to provide the transparency needed to facilitate greater coverage certainty at risk-appropriate prices.
Praedicat’s analytics will provide the modeling to inform the product structuring and underwriting. Its model will also help assess the likelihood and severity of a casualty event, with the granularity needed for insurers to take action.