Following unprecedented storm damage losses in the US, 2005 is believed to be the most costly year ever for insurers, with 2006 set to provide more of the same, warns Aon Limited's 2006 Risk Report
While businesses continue to deal with traditional risks such as employers' liability and directors' and officers' liability, exacerbated by factors such as a growing UK compensation culture or more litigious shareholders, new or re-emerging risks such as oil price volatility, pensions scheme legacies, terrorism, pandemics, and climate change have all risen up the corporate agenda.
Key points highlighted in the report include:
- Storm damage topped the causes of insurance losses in 2005, with Aon expecting further increase in hurricane activity in the short term
- After the oil price surges of 2005, businesses need to recognise the historic volatility of the oil markets and plan for the prospect for sudden price falls as well as rises
- The history of global pandemics shows why businesses need to bring threats such as avian flu higher up the company agenda
- As the world learns to live with the new age of terrorism, the market for terrorism risk is maturing - premiums remain soft - but the need for cover is increasingly acknowledged by business
- With two thirds of companies having no exit strategy in place for their defined benefit pension schemes, companies need to take action now.