The recent RiskScan 2024 survey from Munich Re US and the Insurance Information Institute (Triple-I) offered timely insights into the current issues facing the sector.
Catching up with Insurance Business to discuss its findings, which were announced and discussed by top insurance CEOs at Triple-I’s annual Joint Industry Forum, Kerri Hamm (pictured), EVP–head of cyber underwriting, client solutions, and business development at Munich Reinsurance America, Inc. outlined its scope. The survey offers a view of risk concerns from both inside and outside the industry, she said, including property and casualty (P&C) carriers, P&C agents and brokers, middle market decision-makers (MM decision-makers), small business owners (SBOs), and consumers.
The top concerns across all groups reflect issues that are top of mind for people living and working in the US. A few findings that were notable, Hamm said, including that all the groups surveyed shared the same core concerns – rising costs due to economic inflation, threats to our homes and businesses from the impacts of climate risk, and cyberattacks.
“Consumers highly ranked a few tangible and immediate risks — natural disasters, climate risk, and cyber threats — while insurance professionals are concerned about both immediate and emerging risks,” she said. “They are concerned with climate risk, business interruption, cyber threats, but also new technologies like artificial intelligence (AI), and new liability risks such as per- and polyfluoroalkyl substances (PFAS).”
RiskScan 2024 also reveals that while the survey respondents recognize the actual risks, a gap likely exists between the understanding of the value of coverage versus the purchase of such coverage.
For example, she said, people understand the risk of cyber threats, yet roughly only one-third of small business owners actually purchase the coverage. “Personal cyber coverage is widely available, yet 40% of people say they wouldn’t consider buying it. We saw that there is a gap in understanding of the drivers of P&C insurance costs. Most people correctly identify climate risk and inflation as drivers of cost, but did not also prioritize legal system abuse, which is a significant cost driver in casualty insurance.”
Hamm noted that it wasn’t a surprise to see that respondents were concerned about cyber but that it is noteworthy – and critical – that all market segments consider it a primary threat. There is certainly more public awareness around cyber incidents, she said, particularly as our lives and businesses become much more digital than in the past. “We are now in a world where we must not only lock the doors of our physical store fronts and homes to avoid loss, but we must also practice good risk management in locking the virtual doors of our digital lives to combat evolving cyber risk.”
Although business interruption understandably wasn’t cited as a top concern for consumers, it was identified as a pressing consideration for middle market decision makers, small business owners, and the agents and brokers who serve their needs. Businesses are subject to business interruption from both physical risk like a tornado, flood, or hurricane, she said, but also to digital loss.
She highlighted how cyber threats can just as easily interrupt commerce through supply chain disruption, data theft, and ransom demands. A strong understanding of potential threats, as well as a strong risk management and insurance program, will help businesses to maintain resilience in a rapidly changing and complex world.
Similarly to cyber issues, Hamm said, there is a lot of media visibility on the topic of climate risk, which likely drives awareness. “We’ve seen the devastating impact of natural disasters on communities, and there is a growing realization that there is an increase in frequency and severity. All RiskScan 2024 survey respondents showed concern about non-peak perils such as thunderstorms, tornadoes, and floods.
“However, again, there is a gap between awareness and coverage, particularly in flood risk. Only four percent of homeowners are covered for flood, yet flooding events have been especially devastating in 2024. Coverage is available but take-up rates are low.”
