Cyber tops reinsurers’ concerns for first time
Cyber risk has topped the list of concerns for reinsurers for the first time, reflecting the anxieties around underwriting a risk that’s constantly changing and the rising threat to reinsurers themselves, according to a new report by PwC.
Uncharted waters: tackling reinsurers’ riskiest exposures is cut from a wider Insurance Banana Skins Survey 2017 produced by PwC and the Centre for Financial Services Innovation (CSFI).
The analysis highlights the most serious concerns on the industry’s risk register. Cyber is closely followed by concern about the industry’s ability to weather change and pressure on investment performance. Other prominent fears include political interference and technological disruption.
Stephen O’Hearn, global insurance leader at PwC, said: “One thing that cuts across all of today’s risks is the limited experience the insurance and reinsurance industry has in dealing with them.
“Change is disorientating but it can also be liberating and it is important to remember that, if approached in the right way, many of these challenges present significant opportunities for reinsurers.”
Arthur Wightman, Bermuda insurance leader at PwC, added: “If risks are generally measured by their frequency and severity, then cyber adds the capacity to confound.
“But cyber risk, if addressed through a combination of rigorous underwriting and active threat intelligence, is a sizeable opportunity for reinsurers to lead innovation in the marketplace and capture new sources of revenue in an otherwise soft market.
“The strategic nature of these risks means that the nature of the response from reinsurers will determine the success and, in some cases survival, of market participants.
“If reinsurers take the right approach the prize is the ability to capture revenues that could eventually equal or surpass cat premium values.”
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