Page 43 - The Insurance Times July 2025

deepfakes, large language models) poses unique risks. ness, and health insurance. Policies must evolve to in-
These tools can be misused for fraud, misinformation, clude mental wellness support and early intervention
and manipulation, threatening the credibility of insur- benefits.
ance claims, court evidence, and customer verification
B. Shifting Work Models and Workforce Risks
processes.
The gig economy, remote work, and hybrid models
B. Quantum Computing and Cryptography raise questions about coverage for freelancers, work-
Quantum computing could break today's encryption place liability, and evolving benefit structures. Insurance
standards, making current cybersecurity frameworks ob- offerings must be redesigned to address a decentral-
solete. The risk for insurers is twofold: increasing vul- ized workforce.
nerability to data breaches and potential liability for fail- C. Litigation Culture and Social Inflation
ing to upgrade systems in time.
Increasing litigation, class-action lawsuits, and social
C. Smart Contracts and Blockchain Scaling media amplification are contributing to social inflation-
The increasing use of smart contracts in decentralized the rising cost of claims beyond expected levels. Liabil-
finance and insurance introduces operational and legal ity insurers may face unpredictable claim outcomes, es-
risks. Code-based execution lacks built-in legal recourse pecially in jurisdictions with rising consumer activism.
mechanisms, making dispute resolution challenging.
Insurers must build expertise in this domain to design 7. Financial Market Risks

parametric and blockchain-based products safely. A. Asset Bubble Corrections
Central banks' monetary tightening following inflation-
5. Biological and Health-Related Risks ary periods increases the risk of asset bubble bursts, par-
ticularly in real estate and tech sectors. This can im-
A. Pathogen Spillover and Pandemic Re-Emer-
pact insurers' balance sheets and solvency margins,
gence
especially those with large investment portfolios.
Despite the COVID-19 experience, the world remains
B. De-Dollarization and Currency Shifts
underprepared for the next pandemic. Urbanization,
biodiversity loss, and climate change increase the like- Geopolitical tensions are leading to moves away from
lihood of zoonotic disease spillovers. For insurers, this dollar-based systems in international trade. Sudden cur-
could mean new exclusions, repricing of health and life rency revaluations could affect reinsurance contracts,
products, and capital adequacy concerns. reserves, and global operations.

B. Rise of Anti-Microbial Resistance (AMR) C. Economic Inequality and Insurance Gaps
Widening income inequality could reduce insurance
Antibiotic overuse has accelerated AMR, rendering
affordability and exacerbate protection gaps. This may
common treatments ineffective. This could increase
healthcare costs, hospital stays, and mortality-leading lead to regulatory pressures for inclusive insurance so-
lutions and public-private partnerships to close cover-
to higher claims and pricing challenges for life and
age gaps.
health insurers.
C. Longevity and Ageing Risk
8. Sector-Specific Risk Snapshots
Improved life expectancy due to medical advancements
Insurance Industry Implications
may exacerbate longevity risk, especially for annuities
Increased need for dynamic underwriting and real-time
and pension-linked products. Insurers need to reassess
data modeling.
assumptions about mortality and morbidity trends, es-
pecially in ageing societies. Pressure to innovate products such as climate-resilient
insurance, pandemic bonds, and mental health riders.
6. Societal and Behavioral Shifts Regulatory scrutiny on disclosure, ESG, and systemic
A. Mental Health Crisis resilience.
Global mental health deterioration-especially among
youth-has insurance implications for disability, critical ill-

The Insurance Times July 2025 39