Duperreault calls for ILS to cover threat from cyber
Brian Duperreault, the chief executive officer of AIG, has called for insurance linked-securities (ILS) to help cover the growing challenge of cyber risk, at the official opening event of the 15th Singapore International Reinsurance Conference, noting that Asia has more cyber attacks than any other region.
The comments followed a speech by Singapore’s minister for finance, Heng See Keat, who said Asia appears to be the world’s most targeted area for cyber attacks. Cyber crime is estimated to have cost the global economy approximately $3 trillion in 2015, and this is expected to double to $6 trillion by 2021.
Nat cat risk is easier to locate than cyber risk and AIG is still working on its cyber models but also on how ILS can help cover the risk, Duperreault said.
“ILS is a necessary ingredient to the solution,” he said. Pointing to the trillions of cyber exposure, Duperreault added that the insurance sector can’t handle the risk on its own.
“There needs to be a broader base of capital covering cyber.”
While the cyber risk of individual companies is arguably easier to assess, the accumulation risk across geographies and lines of business is far more complicated, Duperreault said.
“We need a pooling of the ILS markets, and I hope to get ILS into cyber risk,” he noted.
Duperreault also pointed to the significant protection gap for nat cat that exists in Asia, saying that countries need to address their exposures and develop risk management strategies. This means looking at urban planning in relation to natural catastrophe risks, mitigating the risk and reducing the exposure.
“We need to recognise that planning for natural catastrophe risk is necessary,” Duperreault said, offering AIG’s assistance through modelling and data in order to mitigate the exposure.
He added that he is looking for further acquisition targets after buying Validus for $5.56 billion. “M&A is a natural way of survival of the fittest,” he said.
Regarding the type of company he is looking for, it should be a company that makes AIG better by adding new capabilities.
“I want to buy something really good,” Duperreault concluded.
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