A recent report by specialist research firm Mactavish claims that insurers and brokers need to seriously rethink the risk assessment process. In the report, Mactavish claims that a new wave of the current financial crisis could strike due to perceived failures by management and the insurance industry to address risks effectively.
The news comes from Mactavish's Sector Risk Research Program, which reports that "parallels can be drawn between large P/C insurance institutions today lacking the ability to fully understand changing risk exposures and more publicized past failures of financial institutions to understand risks assumed."
The report also states that turmoil in the commercial insurance market is expected as a latter phase of the financial crisis. Many of the executives surveyed said insurers must act quickly to identify areas of their portfolios where underwriting is most seriously misaligned, adjust reserves and explain the implications to their stakeholders.
"Many commercial insurers have failed to keep pace with the unprecedented changes in commercial risk, and the findings have revealed significant flaws in the way commercial risk is assessed and insurance placed," said Achim Bauer, partner at PricewaterhouseCoopers. Many are keeping an eye on this possible "perfect storm."