A survey has found that cyber attacks and terrorism represent the two biggest emerging risks to the reinsurance industry in 2015.
The survey, by Guy Carpenter & Company in the United States, found that 40% of those polled ranked cyber attacks as the most threatening emerging risk of 2015, while 31% labelled terrorism as the biggest risk for the coming year.
Third place went to climate change; with 29% of the reinsurance professionals surveyed noted the changing environment as the biggest emerging risk.
Michael Gottlieb, Managing Director of Mega Capital, believes that cyber risk is a growing concern in Australia but it may take longer than the year for the threat to be fully realised.
“I think cyber insurance… is the product that really is least understood in the marketplace at the moment. I think it’s the biggest uninsured exposure that clients face... and I don’t necessarily think they understand the exposure or the consequences to their business of a cyber attack.
“So while I don’t think it’s something that will ‘break out’ this year, certainly there’s been a lot of traction over the last few years, the premium pool’s increasing, there are more and more clients who are aware of it, and it’ll be a slow build as the education process continues. But over the next few years, I expect cyber insurance to become more and more prevalent in our industry.”
Andrew Marcell, Managing Director and Chief Executive Officer of US operations at Guy Carpenter, said of the survey: “Cyber attacks are one of the most serious economic and national security challenges facing not only the insurance industry, but governments and businesses around the world.”
“The challenge in facing emerging risks such as cyber attacks or terrorism, where there is less of a historical precedence and data available, rests in modeling and quantifying the potential impacts. Assessing and managing current and future risks will continue to be critically important for the industry to realise its growth objectives.”
Not only did the survey outline the biggest emerging risks but it also looked at the best “route to profitable growth” in the reinsurance industry and found that 40% of respondents believe that new products offer the best avenue for growth – up from 24% last year.
Opening up new geographic markets followed at 23% and new distribution channels rounded out the top three at 17% while mergers and acquisitions interested 14% of respondents.
Only 19% of respondents saw the threat of natural disasters as the leading threat to growth thanks to a relatively calm year for disasters in America and the rest of the world.
Read more about the biggest risks and potential rewards of 2015 in the next issue of Insurance Business Magazine – due out at the end of November.