Cybersecurity exposures top the list of emerging risks facing insurers, which must deal with both coverage and operational issues, a panel of insurance chief risk officers said.
“Cyber, in the short term, is clearly on the top of everyone’s minds,” said Robert Paiano, executive vice-president and chief risk officer for The Hartford Financial Services Group.
As first reported in Business Insurance, Mr Paiano said insurers must factor in growing cyber exposures from their own cybersecurity perspective, as well as on the coverage side through insureds.
He made the comments during a session of S&P Global Ratings’ 37th Annual Insurance Conference, being held online.
Dan Hogan, chief risk officer for Liberty Mutual Insurance, said his firm sees cyber as multidimensional. “Is it an emerging risk or has it emerged?” he asked. “From our vantage point, it’s both. It’s here but it’s also evolving at an astronomical rate, which requires us to continue to treat it as an emerging risk.”
Primary insurers are moving to reduce their exposures as cyber losses mount, said Turab Hussain, chief risk and actuarial officer for PartnerRe.
“Generally, there’s a view that insurers are thinking about how to share more of the losses with insureds,” said Mr Hussain. Retentions are increasing and hourly retentions on business interruption are “being pushed up by the primaries”, he said.
Mr Paiano said there is also renewed interest in event cancellation and business interruption coverages, which The Hartford continues to underwrite while “clarifying policy language, ensuring the policyholders understand exactly what the coverages include”.
Parties are focusing on “clarity of coverage and understanding and communication what is covered and what is not covered”, said Mr Hussain.
Governments may have to play a role in transferring risk associated with the pandemic, the panellists said.
“The [US] Federal Government is the sole entity with a sufficient balance sheet to accommodate this systemic risk,” said Mr Hogan. Mr Hussain added that there may be opportunity in “public/private partnerships”.
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