A cyber security event could pose a systemic threat on a par with the current pandemic, yet the market for cyber risk insurance is still underdeveloped, according to Greg Case, (pic) CEO of Aon.
Case was speaking as host of a fireside chat with Axa CEO Thomas Burberl as part of the broker’s virtual renewal season.
Case acknowledged that the COVID-19 pandemic is taking a terrible toll but “has created a window for change and innovation that the industry has never seen before”.
He asked what the insurance industry can learn from COVID-19 and whether systemic risks, including climate change and cyber threats, could transform insurers’ relationships with their clients.
Buberl said that the lockdown has emphasised the importance of digital interaction with insurers’ customers:
“We have invested more in technology to meet demand and we want to continue on this journey. Also, as with others in the industry, we have all seen a call for greater [insurance] contract clarity. Customers, brokers and insurers see the need for clear contracts.”
Burberl added that the pandemic has underlined the role of the insurance industry as a social actor, noting that “insurers acting as a catalyst for societal change will be more important in the future”.
Providing adequate coverage for pandemic risk calls for risk sharing between private companies and public entities in a way that is already in place for terrorism and natural catastrophe risk, Buberl said, adding that cyber risk will likely need the same approach.
Referencing AXA’s recent Future Risk Report, Case agreed that a cyber security event could pose a systemic threat on a par with the pandemic, yet noted the market for cyber risk insurance is still underdeveloped.
Picking up the theme Buberl said: “Cyber is the next digital pandemic and we have only seen the beginning of what is to come. If we want to crack this market and build better coverages, we need more data and more data sharing – with customers and with government bodies.”
Buberl reiterated that the industry needs to move from “payer to partner” and renew the focus on helping customers with loss prevention and making a speedy recovery: “Insurance from a customer perspective has always been a necessary evil. Things have started to change hopefully but we must put more ourselves in our customers’ shoes and take a risk management approach to come up with solutions that combine service with insurance coverage.”
Investment in analytics by the industry is unprecedented, Case said, but added that “if we do not take action based on new insights it is hard for our clients to take on those new solutions. We all need to think harder about how we use analytics otherwise we will stagnate”.
“Just signing the policy and giving you the wording is not enough. We need to really think how we can help our customers in this transformation process when it comes to risks and mitigating risks – which is fundamentally different to what we have been doing for the past 50 years.”
To watch the full interview click here: https://aon.io/31YRfMP.