Nine risks the industry must be wary of: Praedicat

The insurance industry needs to keep a close eye on the horizon for future threats that might be “the next asbestos”, according to risk analysis company Praedicat.

At a presentation on Bermuda before the APCIA conference, Praedicat president and chief executive officer Robert Reville said that Praedicat was looking at nine key risks or “known unknowns” that might affect the insurance market in the years ahead.

One threat transcending many industries is mass torts. Reville noted, for example, that opioid medications are causing an estimated 55,000 deaths in the US every year, more than the number of people killed in auto accidents, gun deaths or when HIV/AIDS was at its height.

According to Praedicat, other possible future threats, in ascending order of magnitude of possible threat, include propyl gallate, proprionate, trihalomethanes, bisphenol A (BPA) replacements, cannabidol, silver nanoparticles, overuse of antibiotics, exposure to diesel, and sugar. According to some estimates, sugar-related obesity causes around 300,000 deaths in the US every year.

Reville said that some of the potential threats on the lower end of the list were still being researched and that more research was required for most of the rest of them. He pointed out that in many cases these were important threats to note as in recent years there has been a movement towards the return of mass torts, with some additional evidence that juries are becoming more suspicious of corporations and consequently are awarding larger amounts in damages.

Praedicat has been tracking around 4,000 potential risks and has a heightened awareness of 76, which have been labelled as “named perils”. The company keeps a close eye on the scientific and legal literature published about these possible risks, and when there is an increase in studies on a particular subject this rings alarm bells at Praedicat.

Reville urged insurers to study possible perils, tighten up their policy language and run scenarios to find out where possible risks to their companies might be.