The world’s reinsurers have warned global business to address the threat from cyber attacks and said insurers must innovate.
Speaking at the 2018 Monte Carlo Reinsurance Rendezvous, Torsten Jeworrek, member of Munich Re’s Board of Management, warned that the threat from security breaches presents a serious threat to the global supply chain in which the maritime industry plays a pivotal role.
“Cyber risks are one of the biggest threats to the networked economy,” he said. “Munich Re is making highly targeted investments in knowhow and development of networks in order to continually improve its services and insurance products. Together with technology partners, we want to keep on developing solutions for these risks in the future.”
He said that, while digitalisation presents huge opportunities for people and companies, the increased networking of machines and equipment can give rise to complex risks such as data theft, disruptions in the interaction between networked machines, and even the failure of entire production lines and supply chains.
“The economic costs of large-scale cyber attacks already exceed losses caused by natural disasters. Where small and medium-sized enterprises are affected, such attacks can soon threaten their very existence,” Jeworrek said.
The biggest cyber-related economic losses to date have been those caused by ransomware and malware, especially WannaCry and NotPetya, an attack that affected the marine sector, he said.
Because of the growing interconnectedness of the economy, such attacks have increasingly resulted in business interruptions and data loss, Munich Re said.
“This trend will continue as more and more machines and devices are connected,” it added.
Demand for prevention and insurance is growing. In 2017, cyber insurance’s market share stood at USD3.5–4 billion, but it is expected to grow to USD8–9 billion by 2020.
“Insurance is only one aspect, however. At least just as important is prevention through technical measures, as well as rapid response and damage limitation in the event of a loss,” Munich Re said.
Reinsurer Swiss Re has also warned that insurers need to embrace new methods of delivering products to their clients and develop cover for new risks if they are to prosper.
“Swiss Re expects companies that respond proactively with more relevant solutions and services in support of their customers’ goals to benefit most from long-term opportunities,” it said.
Looking ahead, risk pools, combined with the expanding protection gap, represent the most significant growth opportunity for the industry, according to the underwriter.
Swiss Re’s chief executive officer of reinsurance, Moses Ojeisekhoba, said, “Together with our clients, we worked through a difficult environment after 2017’s natural-catastrophe events. By paying claims and helping to rebuild, we could again demonstrate the value of sharing risks. Although the market environment remains competitive with an abundance of capital, the long-term opportunities that lie ahead are positive.”
IHS Markit’s cyber-security results are out on 21 September.