"All risks" in property insurance – An attempt to remove ambiguities
This publication in Swiss Re’s Technical publishing series focuses on the all risks covers which are offered in virtually all conventional property insurance markets.
Neither direct insurers nor reinsurers have ever been entirely at ease with "all risks": the very name appears to promise more than the product entails, and clients have often been disappointed as a result. Calculating premiums for "all risks" business is also difficult; how can the “right” premium for insuring property and assets be determined when all the insured hazards are not even known? Given these circumstances, loss statistics can serve only as an indication of the lowest amount of premium that might be needed.
As an attempt to analyse the main weaknesses of the "all risks" policy, the publication sketches out several modifications that, taken together, are likely to result in a product that is satisfactory for both the policyholder and the insurer. Indeed, the publication argues that professional product design and systematic premium calculation help to tame the “all risks beast”, allowing all elements of the cover to be given their fair price.
