5 Recent Business Insurance Trends to Watch

1. Global Risks Intensify 

Extreme weather events, data breaches and geopolitical conflicts have dominated headlines. According to the World Economic Forum, we can expect these issues to intensify: Their Global Risk Report 2024 paints a picture of the key challenges and potential risks we should expect across sectors in the next two years. 

Cyber insecurity ranks fourth. In 2022, it was reported that 83% of organizations suffered at least one data breach. As the world grows more digitally dependent, we will face more unprecedented cyber risks that business owners must navigate. 

Small organizations are the most vulnerable. They generally don’t have the resources to prevent operational disruptions following a cyber attack. This often leads to financial losses with reportedly only 25% carrying cyber insurance. 

The impacts of climate change are also top of mind. With unpredictable extreme weather events happening in every corner of the globe, the insurance industry’s approach to the issue is also shifting. Insurance professionals will be tasked with creating innovative risk models to analyze climate-related threats. But will also focus on promoting environmental, social and governance (ESG) frameworks. 

For example, a number of European insurance companies are proactively prioritizing these commitments in their underwriting and investment portfolios. Others are acting as advisors to their clients, assisting with creating company decarbonization initiatives.

Think of it as weakening the disaster to reduce the damage. It’s an innovative approach for an industry that is usually brought into the conversation post-disaster. Instead, insurance companies can reduce the environmental risk beforehand and provide insurance expertise after the fact.

2. Loss Prevention vs. Reactivity 

Insurance is typically viewed as a safety net, which it is; however, insurance professionals are transforming from the “clean-up crew” to risk management specialists. Not just in anticipation of environmental damages but also other unprecedented global risks. 

For example, insurers have established prerequisites for purchasing specific policies, like cybersecurity measures to buy a cyber liability policy. These measures ensure a company has the proper resources in place to mitigate the likeliness of an attack. 

This year, 20% of organizations reported that they lack the right number of people with the required skills to meet their cyber-resilience objectives. With another 11% sharing that they are unsure if they have any resources with the necessary skills at all. A number that has doubled since last year. Today, insurance companies are upskilling their teams to learn what necessary resources are needed to avert a cyberattack and becoming experts in cybersecurity too. 

Essentially, insurers are guiding businesses to understand how to best equip themselves to prevent or mitigate the risk of a breach. Doing so can prevent companies’ financial losses and protect their reputations by safeguarding clients’ personal information. 

At Founder Shield, we’ve reorganized our teams, enabling them to focus on certain industries and niches, meaning we have the skills and knowledge to provide customized coverage solutions. 

And the specializations in the industry won’t stop there. 

3. Bespoke Products for Emerging Markets

Gone are the days of one-size-fits-all. Or so we thought. Many insurers still continue to provide old-fashioned policies for industries and businesses that need something more personalized.  

At Founder Shield, while our clients are focused on innovating their products and services, we’re also innovating our solutions. We create policies that offer coverage for possible risks unique to each industry, addressing how to reduce risks effectively. We expect to see more bespoke insurance solutions for emerging industries, such as modernized farming (i.e., vertical farming), space tourism, virtual reality, and augmented reality (AR).

For example, VR and AR products are becoming increasingly advantageous for companies globally. And it’s creating a new world of opportunity for the insurance industry, which must now offer coverage for issues like privacy violations and virtual harassment. Some of these now-known risks are covered by customized insurance policies, like crime or digital asset coverage.

4. Technology Promotes Valuable Interactions

Technology allows insurance companies to streamline interactions with clients. It’s given us the ability to effectively communicate through multiple channels. Whether it’s valuable insight about the industry through our blogs or changes to a policy by email, these interactions shape the customer experience.

The experience usually starts with the application process. Since we know there are other things you’d rather do with your time than answer questions that don’t apply to you, the insurance application is sure to need a makeover.  

At Founder Shield, we’ve taken the lead by making the experience of getting a quote easy. We added the options to:

• Invite a collaborator, so you don’t need to tackle the task of finding insurance on your own.
• Auto-populate answers, carving away the minutes-to-completion time.
• Submit applications whenever you want, using our coverage recommendations as a springboard. 

In order for insurers to stay relevant, we have to be dynamic by enhancing the existing tools available to maximize coverage options while minimizing the time customers spend doing applications.

5. Macroeconomic Factors Remain Influential

We’ve stepped into this year unsure of what to expect of the economy as interest rates and political tensions remain high. Because of economic uncertainty, we’ve seen insurers take a more cautious approach. You’ve seen this reflected through tightening standards for approvals.

Those searching for policies have been met with restricted entry, decreased coverage and higher rates. This is referred to as the hard insurance market — and it’s heavily influenced by the weakening state of the economy. 

With inflation rates dropping and a few central banks suggesting interest rate cuts this year, we could see the hard insurance market softening. This could open the door for growing businesses to obtain their desired coverage in a market with more options. Coupled with attractive rates and policy terms, companies could limit overhead costs and have a wider safety net.