What do you do if your insurance sector is struggling to maintain resilience?

Lack of resilience is generally linked to too many claims, not enough premium, insufficient backing assets (solvency capital) or a combination. The key would be to understand the underlying cause. Then a course to improved resilience can be plotted using tools such as premium corrections, rerating, reinsurance, capital and claims management. The overall requirements would be to accurately price risk, have sufficient capital and reinsurance to manage volatility, only pay valid, priced-for claims and manage expense levels. Recovery may not be quickly, but tools such as reinsurance could assist, although it will come at a price. All options will need to be weighed against their cost, benefit, ease of deployment and long-term sustainability.

Insurance carriers should prioritize two key areas: early warning systems and stress testing to enhance organizational resilience. For Early Warning Systems, it's essential to establish and maintain systems that can identify and track emerging risks across social, technological, environmental, and economic domains. By employing techniques like horizon scanning and scenario planning, organizations can proactively anticipate potential disruptions. Regarding Stress Testing, regular assessments are crucial to evaluate the company's financial robustness under diverse scenarios, such as natural disasters, pandemics, or cyberattacks.

Para reforzar la resiliencia en el sector asegurador, es crucial comenzar con una evaluación de riesgos profunda y reflexiva. Mire más allá de las operaciones cotidianas y considere los desafíos a gran escala que podrían afectar su empresa, desde recesiones económicas hasta cambios en la normativa y riesgos cibernéticos. Esta comprensión le permitirá no solo reaccionar a las adversidades, sino anticiparse y adaptarse proactivamente. Cultive un enfoque resiliente: vea cada desafío como una oportunidad para aprender y crecer, y comparta esta visión con su equipo. Al hacerlo, no solo estará protegiendo su negocio, sino también inspirando a otros a construir un futuro más seguro y adaptable.

The cyber insurance industry is indeed facing challenges in maintaining resilience. The influx of competitors driving prices down to gain market share can lead to unsustainable pricing models. This, coupled with the increasing frequency and severity of cyber attacks, means that insurers are at risk of significant losses. Insurers need to refine their risk assessment capabilities to price policies more accurately. This involves leveraging data analytics and threat intelligence to understand the risk landscape better. Of course, this isn't easy with pressures from investors to show quarterly profits. Decreasing underwriting standards while at the same time lowering prices can cause a lot of problems down the road.

One strategy insurance companies can leverage is Cybersecurity Partnerships. Insurers should partner with cybersecurity firms to offer comprehensive risk management solutions. This can help clients improve their security posture and potentially reduce claims. Using tech to educate policyholders about cyber risks and preventive measures can mitigate the frequency of incidents. This includes promoting best practices and providing resources for cyber hygiene like phishing simulations. Developing new insurance products that address the evolving nature of cyber threats can provide better coverage options for clients and create more accurate pricing strategies. For example, utilities need coverage for physical damage caused by a cyber event.