The global insurance industry will run out of capacity for cyber risks in the next three years Swiss Re’s Group CEO has warned.
Christian Mumenthaler (pic) was speaking on the opening day of the Singapore International Reinsurance Conference (SIRC) 2020, which is being held virtually due to the impact of the COVID-19 pandemic.
He was asked how he saw the issues of cyber risk which had grown in recent months and more and more businesses work remotely.
He said in many ways cyber was a “a terrifying risk” given it does not fulfil the criteria for insurance in terms that in several cases it is not an unforeseen risk.
“The ability to understand the exposures is difficult” he said. “The potential for a global cyber event is real and as such it is a threat to the market.”
He added: “I believe that capacity will run out in the next three years. It will need governments to act, maybe in partnership to look at how we can fill the gaps.”
Mr Mumenthaler continued: “Governments need to be thinking about this now as we need to think about the issue in advance of the problem become reality. If you take the current pandemic we have not thought ahead and the response was not what we would have liked.
“There are some structural problems in terms of cyber risks which have not been solved. I cannot say that we will be able to cover all cyber risks for the next 20 years. It will need new solutions.”
On the pandemic Mr Mumenthaler said the world needed to understand it required ongoing discipline to mitigate the risks and emerge from the virus.
“I am a scientist, and I understand that pandemics are difficult to deal with if you are using gut feeling. If it is a more science-based society they will listen to reason and take better decisions based in the science.”
He added: “Asia as we saw has been very disciplined in its response. Europe has been somewhere in between and certain American countries have been less disciplined and less reliant on science.”
“I have seen reactions in some countries which remind me of the Middle Ages,” added Mr Mumenthaler.
On the steps that need to be taken he added: “There has been plenty of evidence from countries around the world as to what is high risk behaviour. Not wearing a mask, going to enclosed spaces, shouting and singing, all enhance the spread of the disease.
“You need to wear a mask and keep distancing. If we do this then shops can put in place systems that allow them to operate and the same goes for schools. It is a question of finding the right balance.
“I acknowledge that there is a degree of fatigue, we want to return to normality, but we need to keep our discipline.”
When asked how it may affect the market, he said that reinsurers and insurers are fortunate that they can operate digitally, but he added that the move to remiote working will come at a cost.
Mr Mumenthaler said the market needed to be aware of the issues of mental health, depression and isolation that working remotely will create.
He said Swiss Re has been pushing the use of digitalisation but believes that it may well see staff splitting their time equally between working remotely and physically within the office.
He added prior to the pandemic Swiss Re had seen around 40% of its staff in the office at any one time so their office systems would be able to cope with a new normal.
However, while desk space would be able to cope it may well be that some firms have issues around access via elevators or stairs particularly in major centres such as London and New York where tower blocks were common.
“We are lucky that we can work remotely,” he added. “Other business sectors do not have that luxury.”