A far-reaching new study by Mactavish, a specialist research organisation which focuses on risk and developments in the commercial insurance market, has found that the commercial risk landscape has changed dramatically as a result of the recent economic turmoil.
PwC believes that many commercial insurers have failed to keep pace with the 'unprecedented' changes in commercial risk profiles in their risk assessment, risk selection and risk pricing and are facing a surge in claims as a result. The reaction of many is to sit back and passively wait for the losses to materialise.
But, insurers need to act quickly to identify areas of their portfolio where underwriting is most seriously misaligned, adjust reserves and explain the implications to their stakeholder community. Failure to get to grips with the threat can only exacerbate the losses and further undermine market confidence.