Cybersecurity exposures top the list of emerging risks for insurers, which must deal with both coverage and operational issues relating to risk, a panel of 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 Inc. in Hartford, Connecticut.
Mr. Paiano said insurers must consider growing cyber exposures from their own cybersecurity perspective in their own operations as well as on the coverage side with insureds.
He made his comments during a session of S&P Global Ratings Inc.'s 37th Annual Insurance Conference, being held online.
Dan Hogan, chief risk officer in Boston for Liberty Mutual Insurance Group, said the insurer 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 Ltd.
“Generally, there’s a view that insurers are thinking about how to share more of the losses with insureds,” said Mr. Hussain. Dollar 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 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.
Government may have to play a role in transferring the risk associated with the pandemic, the panelists said.
“The Federal Government is the sole entity with a sufficient balance sheet to accommodate this systemic risk,” said Mr. Hogan. Mr. Hussain said there may be opportunity in “public/private partnerships.”