Underwriting cryptocurrencies, non-fungible tokens (NFTs) and other types of crypto assets is among the top 14 emerging risks for insurers worldwide, Swiss Re has warned.
The reinsurance giant's latest SONAR report, which is the 10th anniversary edition, explains how ownership, taxation and regulatory issues present insurers with fresh challenges.
For example, it can be unclear as to whether certain crypto assets are implicitly covered by existing property or cyber policies, raising the prospect of liability disputes.
The report also outlines how the digital financial economy is facing new risks, with advancements in quantum computing, for instance, potentially threatening existing IT-security protocols.
Automated underwriting, a new pandemic and invasive species are also among the emerging risks across technological, economic, social and environmental areas identified in the report.
Patrick Raaflaub, group chief risk officer at Swiss Re, said: “A global pandemic, geopolitical conflicts, surging inflation and an unstoppable climate crisis – these are just some of the many risks that SONAR has examined over the past decade that have ultimately materialised.
“However, researching new risks is not about forecasting. It is about raising awareness of risks that may impact society and preparing ourselves accordingly."
The top 14 emerging risks outlined in the report include:
- Mistrust in health and medical science
- Risks in fertility services
- Preparing for a new pandemic
- Raw material shortages for construction
- Insurance in the commercial space age
- Thawing permafrost
- Decarbonising shipping with new fuels
- Quantum computing
- Growth in biotechnology
- Underwriting crypto assets
- Invasive species
- Sustainable farming
- Artificial intelligence in legal practices
- Automated underwriting
Looking specifically at climate-related risks, the report explains how he thawing of permafrost, which covers a quarter of the northern hemisphere, could not only damage infrastructure and accelerate climate hazards, but also release disease-carrying pathogens.
Meanwhile, with the agricultural sector struggling to cut emissions, Swiss Re argues that insurers can play a vital role in the faster adoption and scaling up of sustainable farming practices by offering suitable coverage solutions and facilitating climate-smart and regenerative agriculture.
“This 10th edition is a good opportunity to reflect on the purpose and value of foresight in general, and the merits of publicly sharing emerging risk insights,” Raaflaub continued.
“Could we have seen this coming? is probably not the most useful question. More pertinent is, could we have been better prepared?”
Image credit: iStock
Author: Chris Seekings