Intangible assets made up approximately 84 percent of Standard & Poors 500 market value in 2015, compared to just 17 percent in 1975...
That means that the purpose of insurance now needs to shift from protecting physical assets to protecting brands, cultures and intellectual property.
As new risks evolve and put considerable asset value at risk, businesses will expect insurers to offer an appropriate response. Our discussions with numerous global insurance players indicate a substantial time lag between the emergence of a new risk and the availability of appropriate cover. This is because insurance players typically require time to become comfortable with data modeling and pricing. Consequently we see widespread underinsurance, with businesses seeking alternative, non-insurance solutions.
But there is a limited time window to take advantage of the huge opportunities presented by these new, intangible and specialty asset risks, before they swiftly commoditize, causing rates to soften and margins to decrease.
To succeed in this new and increasingly commoditized environment, insurers need the capability to quickly capture, analyze and model data on intangible risks. Although some of these competencies can be built internally, external collaboration may also be necessary.
Visit the KPMG Emerging Risks Web Page