Insurance risks are becoming more complex and interconnected than ever before, according to Denise Perlman (pictured above), president of national business insurance at Marsh McLennan Agency. One of the most prominent trends is artificial intelligence (AI), with clients increasingly asking about its implications. AI adoption in insurance has grown by 25% in the past year, and by 2025, it is estimated that 95% of customer interactions in the insurance industry will be facilitated by AI.
This interconnected nature of modern organizations, enabled by technology, introduces challenges, especially when considering third-party risks. A notable example, Perlman tells IB, was the recent CrowdStrike incident, which saw a global outage by pushing a faulty update to Windows machines.
“That’s something that can impact an entire industry with unintentional and unplanned power failures and outages,” she says.
While the incident was not a cyberattack, this topic does go hand in hand with cybersecurity, which is another pressing issue facing the insurance industry.
The global cyber insurance market was worth about $13 billion in 2023, almost double the $7 billion estimated size in 2020, with forecasts suggesting that cyber insurance will grow into a $22.5 billion industry by 2025.
“I've never talked more about cyber. It's pervasive, it's unpredictable, and it’s often debilitating to a company,” Perlman says.
The threat of cyberattacks can devastate a company’s operations and reputation, and despite the high-profile nature of attacks on larger firms, smaller businesses are also at risk.
"Some of the smaller businesses rely so much on third parties or they don’t have cybersecurity or privacy plans in place, which might make them easier to target," she says.
Marsh McLennan has responded by developing a robust cyber risk management strategy. Each of their 13 regions has a dedicated cyber expert, and they work closely with the Marsh Cyber team to ensure their clients are well-protected. Their cyber solutions extend beyond reactive measures.
"We help clients understand certain scenarios that could impact their business and how to handle them," Perlman says.
They offer a cyber resiliency network, providing discounted loss mitigation services to clients, and work with insurers to pre-negotiate cyber terms and conditions. This proactive approach is part of their commitment to helping clients avoid the potentially catastrophic consequences of a cyber incident.
“We can help our clients really visualize what their potential exposures could be to minimize some of those claims and risks,” Perlman says.
This applies not only to local events but also to global incidents, like the war in Ukraine. While many businesses might feel disconnected from international conflicts, Perlman stressed that such events could have far-reaching effects on supply chains.
"A business might say, 'Oh, that’s happening on the other side of the world, it doesn’t matter to me,' but indirectly it can impact their supply chain and operations," Perlman says.
As a result, Perlman emphasizes the importance of staying proactive in risk management. Monitoring different industries, such as healthcare and construction, helps Marsh McLennan keep their clients informed of sector-specific risks and tailor their solutions accordingly.
Perlman’s view is that insurance must evolve alongside the risks businesses face, often necessitating the creation of new products where gaps exist.
"If it’s something that we don’t have in the industry today, let’s create something," Perlman tells IB.
