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Professional Indemnity Insurance (PII) is a type of insurance designed to protect professionals against claims of negligence or breach of duty made by their clients. It covers the costs and expenses incurred in defending against such claims, as well as any resulting damages or compensation that may be awarded. - read more
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Professional Indemnity Insurance (PII) remains one of the keystones of risk management for professionals across Australia. Yet, misconceptions and lack of awareness can lead to inadequate coverage, leaving individuals and businesses vulnerable in a litigious environment. - read more
Professional indemnity insurance is an essential safeguard for practitioners and businesses that provide expert advice or services. This type of insurance helps to protect professionals against legal costs and claims for damages from an act, omission, or breach of professional duty in the course of their work. For Australian professionals, where litigation is increasingly common, it's a pivotal component of risk management. - read more
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Indemnity insurance may sound like complex legalese, but at its core, it's a straightforward and crucial protection for businesses of all types and sizes. Simply put, it's a form of insurance that shields a business from bearing the full brunt of financial losses due to lawsuits or claims made against it. - read more
APRA Survey Reveals Impact of Climate Change on Insurance Industry Practices
APRA Survey Reveals Impact of Climate Change on Insurance Industry Practices
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A recent analysis by the Australian Prudential Regulation Authority (APRA) reveals that over 90% of general insurers and reinsurers anticipate climate change will influence their underwriting procedures, posing new challenges to the industry.
The APRA report indicates that climate impacts will be prominently felt in pricing uncertainties and policy exclusions. This sheds light on how climate change continues to shape the insurance landscape, as extreme weather events become increasingly significant risks for the home insurance sector.
The survey conducted in April included 149 participants from APRA-regulated sectors such as general insurers, life and health insurers, banks, and superannuation trustees. These inputs underscore a growing understanding of how climate risks intersect with insurance businesses.
Interestingly, while the majority of large companies have shown progress in their "climate risk maturity" since the previous 2022 survey, there remains a portion—about 25%—whose maturity scores have decreased. This suggests a divergent approach to addressing climate risks across the industry.
APRA sees the need to prioritize climate risk within its broader regulatory and supervisory role. As per Suzanne Smith of APRA, "Stakeholder expectations are rising, and APRA is committed to ensuring that the institutions it regulates take a strategic and risk-based approach to managing climate-related risks in a proportionate manner.”
This commitment by APRA marks a critical shift in regulatory focus, as they aim to ensure that financial entities adequately recognize and integrate climate-related risks into their strategic frameworks.
The original survey report highlighted expectations aligned with the regulatory body’s perspectives. Acts and measures by insurers suggest an acknowledgment of climate-driven event risks, pushing the industry towards more resilient underwriting strategies and risk assessments.
The findings, as presented by APRA, draw attention to the urgent need for insurers to evolve their strategic approaches in the face of rising climate change challenges: ensuring pricing models and risk evaluations are adequately forward-looking and resilient.
To these ends, the insurance industry is expected to innovate, incorporating new technologies and data analytics to improve their prediction models and coverage plans, addressing both current and future climate risks.
While APRA’s survey confirms that climate risk presents a formidable challenge to traditional insurance norms, it also opens a new frontier for insurers to enhance their market strategies and client relations through sustainability-focused frameworks and adaptive risk management practices.
Published:Tuesday, 19th Nov 2024 Source: Paige Estritori
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