Navigating the Evolving Landscape of Risk and Resilience in the Insurance Industry

The Role of Insurers in Mitigating Natural Disasters and Cyber Threats

Insurers are increasingly stepping beyond their traditional roles as financial first responders to help policyholders mitigate risks posed by natural disasters and cyber threats, according to panelists at the Joint Industry Forum (JIF). The C-Suite on Resilience panel, moderated by John Huff, president and CEO of the Association of Bermuda Insurers and Reinsurers (ABIR), included Richard Creedon, CEO of Utica Mutual Insurance Company; Paul Horgan, Head of U.S. National Accounts at Zurich North America; John Smith, CEO of Pennsylvania Lumbermens Mutual Insurance Company; and Rohit Verma, CEO of Crawford & Co.

The Evolution of Resilience in the Face of Increasing Risks

Huff noted that the concept of resilience has evolved from preparedness to meet and rebound from large, single events like hurricanes, earthquakes, or wildfires. He suggested that we may have entered a new period for leadership to think of resilience more broadly, considering the interconnectedness of businesses, individuals, and communities through technology and global commerce, as well as supply-chain and labor-force disruptions due to the pandemic and growing cyber risks.

Opportunities for Insurers in a Changing Risk Landscape

Richard Creedon from Utica Mutual highlighted the opportunity for insurers to expand beyond traditional risk-transfer products by augmenting their capabilities with risk management, loss control, and other services. John Smith from Pennsylvania Lumbermens emphasized the importance of listening to different perspectives to understand the evolving nature of risk. Paul Horgan from Zurich North America drew a contrast between U.S. insurers and their European counterparts, noting that European insurers have been more focused on climate change for a longer time. Rohit Verma from Crawford & Co. stressed the need for the industry to come together as a team to rethink the ecosystem of insurance to have a meaningful impact on resilience.

In light of recent events, such as the increasing frequency and severity of natural disasters and the growing threat of cyber attacks, it is crucial for insurers to adapt and innovate. According to a report by the National Oceanic and Atmospheric Administration (NOAA), the U.S. experienced a record-breaking 22 weather and climate disasters in 2020, each with losses exceeding $1 billion. Meanwhile, the global cost of cybercrime is projected to reach $10.5 trillion annually by 2025, up from $3 trillion in 2015.

To stay ahead of these evolving risks, insurers should consider investing in advanced data analytics and predictive modeling to better understand and mitigate potential threats. Additionally, fostering collaboration within the industry and with other sectors, such as technology and finance, can lead to more comprehensive and effective risk management solutions. By embracing these strategies, insurers can not only protect their policyholders but also contribute to building a more resilient society.