Cyber risk is one of the most pertinent global threats facing the world today. With firms’ and individuals’ reliance on technology only set to increase, the frequency and severity of cyber incidents is likely to rise in turn. The cyber insurance market is set to undergo significant growth in the coming years, accelerated by increasing levels of liability and data protection regulation.
An Investigation into the Insurability of Pandemic Risk
- Life and health risks for pandemics similar to COVID-19 are insurable: they are generally non-systemic and modellable.
- Property & casualty (P&C) insurers, on the other hand, would have to collect business interruption policy premiums for 150 years to make up for projected global output losses in 2020 related to COVID-19.
This first report in our research series on pandemics and insurance explores, in number terms, the capacities of insurers to absorb pandemic-related costs. Encouragingly, research findings indicate that pandemics on the scale of, and similarly lethal to, COVID-19 pose no fundamental insurability challenges for health and life insurers. In the commercial insurance arena, however, the uncontrollable aggregation and correlation elements of pandemic risk defy insurability.
COVID-19’s present and foreseeable social and economic impacts are a call to invigorate and recalibrate discussions to address social inequality and explore new approaches driven by public-private partnerships. Private insurance, though not designed to address social inequality per se, can offer financial relief to people or households when calamities strike. Such shocks hit the poorest the hardest.
Climate and flood experts Maryam Golnaraghi and Carolyn Kousky discuss how private insurers in the U.S. can complement the NFIP's residential flood policies by better tailoring products to needs – providing low-cost financial protection – and incentivising mitigation measures.
Watch the entire #RiskConversations webinar on our flood risk research, Building Flood Resilience in a Changing Climate.
The COVID-19 crisis is a stark reminder of other looming threats, physical and digital, with the potential to cause extreme disruption. In an insurance context, the pandemic underscores the importance of clear policy wording, as ambiguity can cause reputational damage to insurance companies and resource-intensive litigation.
InsuranceERM has announced its first 'Most Influential on Climate Change' list, and we congratulate Maryam Golnaraghi, Director Climate Change & Emerging Environmental Topics, for inclusion in this prestigious cadre of people 'leading and shaping the insurance sector's response to climate change'.
