As companies continue to face having high proportions of their workforce off sick or isolating as we move into 20221, insurers are starting to ask what might be the possible impact of ‘resilience fatigue’ on our customers across every sector in 2022.

Although most organisations have leveraged the pandemic to improve operations from the ground up and the vast majority (84%) of business leaders believed they would be more resilient in 2022 as a result, high levels of optimism do not mean that business risks have gone away.

Business risks top concern in 2022

Indeed, over a third (34%) of business leaders in the US and UK believe that risks in this grouping – which include supply chain, business interruption, boardroom (director failure), reputation, employer risk (looking after staff through and post COVID-19) – will be their top concern in 2022.

We are already seeing supply chain issues impacting property claims, with a possible overspill into technology product liability claims if companies are forced to substitute missing parts that could lead to loss and problems further down the line.

We also see scope for COVID-19 issues driving Directors’ & Officers’ liability (D&O) and employment claims this year as COVID-19 positive employees or their families bring injury and manslaughter claims or raise issues around vaccine mandates – with potential for class actions from those required to vaccinate as well as from those who caught COVID-19 from unvaccinated employees.

Social inflation, already a scourge on casualty markets, could become super-charged by such concerns, as pandemic pressures encourage jury members to believe ever more extreme financial redress measures are warranted.

Against this backdrop, there can be little doubt that the complex and highly integrated risk environment will drive a sharp rise in claims severity, with settlement amounts far exceeding previous levels. And as this threat grows, clients will likely demand improved granularity around how insurance will respond - the industry will want to be clear it is not inadvertently including COVID-19 risk in policies.

As the liability landscape continues to shift and expectations of our industry rise, the value of closer and more responsive insurance partnerships that focus as much on risk management and mitigation as on traditional risk transfer, will become increasingly evident.

Bethany GreenwoodGroup Head of Cyber & Executive Risks, Beazley

Key takeaways

  • 2022 may be the year in which supply chain, D&O, reputation and employment liability concerns ‘leak’ across insurance classes, creating ever more complex, integrated risks with no obvious or traditional insurance solution.
  • US businesses feel notably more resilient than their UK counterparts to supply chain and business interruption risk, but reputation risk is something of a blind spot for companies in both territories.
  • Addressing the impact of COVID-19 and social inflation on claims for complex integrated business risks will be a priority for 2022.
  • Business leaders are likely to look to their insurance providers for greater granularity and transparency on wordings. This will present an increasing challenge for the industry going forward.
  • It will be more important than ever for insureds to pick a long-term insurance partner with the expertise and insight required to help them navigate the complex business risk landscape.

Which business risks are predicted to dominate in 2022?

Business risks dominate in the high risk – low resilience quadrant of our risk-resilience matrix – more than any other category of risk.

How resilient do business leaders feel to business risks in 2022?
Percentage of sector business leaders expecting to feel ‘very prepared’ to anticipate and respond to business risks
Risk: Business leaders were asked to identify which risks were their top concern within three risk categories: technology, business, and environmental.
Resilience: Business leaders were asked to rate their resilience to these risks in terms of their ability to anticipate and respond.