Insurers Use Diverse Perspectives to Identify Emerging Risks
CHICAGO – Insurers are continuously confronted with a multitude of emerging risks. However, industry leaders highlight that by leveraging diverse perspectives and maintaining a disciplined approach, these exposures can be effectively mitigated.
During a panel discussion at the American Property Casualty Insurance Association’s annual meeting in Chicago, a former regulator pointed out that regulatory controls can sometimes complicate the risk assessment process.
Preparation for various perceived threats is crucial for insurers to stay ahead of emerging risks. Ann Chai, the chief risk officer at Zurich North America, emphasized the importance of readiness in the face of these challenges.
For instance, concerns over solar flares disrupting cellular networks and satellite communications have been on the radar of insurers and risk managers for several years. In response, the industry has conducted various tabletop exercises designed to test the resilience of IT systems against potential solar flare disruptions. According to Ms. Chai, these exercises proved invaluable during the recent CrowdStrike incident, which involved widespread computer system disruptions in July.
“A lot of the tabletop exercises that we did and worked with our customers on to make sure they are resilient came in handy during that event,” Ms. Chai remarked. “It’s about the discipline of preparedness.”
The engagement of diverse disciplines is another key strategy for assessing potential risks. Stephen Marohn, president of specialty property/casualty at The Hanover Insurance Group Inc., noted that collaboration between experts in underwriting, risk engineering, claims, and legal fields provides multifaceted perspectives on possible risk scenarios.
“Then you can take a step back and assess those risks and figure out how you want to manage them and mitigate them,” Mr. Marohn explained.
Through effective risk pricing, insurers can also assist society in evaluating the costs associated with emerging risks. Terri Vaughan, a board director for various insurance industry companies, underscored the importance of maintaining the integrity of pricing and underwriting mechanisms. “The more that we interfere with pricing and underwriting mechanisms, the more we screw up that very, very important transparency goal,” she cautioned.
In conclusion, the insurance industry is recognizing the value of collaboration and disciplined preparedness to navigate the complexities of emerging risks. By engaging experts from various sectors and maintaining transparent pricing strategies, insurers can better equip themselves to manage these challenges effectively.
