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Cyber security tops list of threats to reinsurers

Cyber risk is now a significant “reputational and systemic” concern for reinsurers, topping a new list of perceived threats to the industry for the first time.

13 SEP 2017 | CHRIS SEEKINGS
Cyber risk tops list of concerns ©iStock
Cyber risk tops list of concerns ©iStock

This reflects both the anxieties of underwriting a risk that is constantly changing, along with the rising threat to reinsurers themselves, according to PwC, which compiled the list.

Change management and investment performance make up the top three concerns for reinsurers along with cyber risk, while other prominent fears include political interference and technological disruption.

“One thing that cuts across all of today’s risks is the limited experience the insurance and reinsurance industry has in dealing with them,” PwC global insurance leader, Stephen O’Hearn, said.

“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.”

The research is based on the findings of PwC’s Insurance Banana Skins Survey 2017, with the top ten concerns for this year and 2015, shown below:


Top ten concerns for this year and 2015
Source: PwC

PwC said that although regulation and challenging market environments remain a worry for reinsurers, the most pressing concerns this year are rooted in the shock and uncertainty of the ‘new’.

In regards to cyber risk, the professional services company argues that a better understanding of a client’s vulnerabilities and the implementation of stronger safeguards will help minimise exposure to cyber threats.

Additional research by PwC has shown that insurance has overtaken entertainment and media as the most disrupted sector in the global economy.

To address change management concerns, firms should be make lots of small decisions, some which will end in success and others in learning experiences, to ensure they are constantly looking to innovate, according to PwC.

While to prepare for political interference, it says it is vital for insurers and reinsurers to make their case with regulators and policy makers, and to draw up contingency plans for every eventuality.

“If reinsurers take the right approach the prize is the ability to capture revenues that could eventually equal or surpass cat premium values,” PwC Bermuda insurance leader, Arthur Wightman, said.

“The strategic nature of these risks means that the response from reinsurers will determine the success, and in some cases survival, of market participants.”


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