Tag Archives: digital capabilities

Insurers Can Boost Resilience on Cyber

Research by Accenture on the extent of cyber risk suggests how carriers can steel themselves against threats to their IT and cyber security.

Knowing your exposure is always critical. But the Accenture survey, Business Resilience in the Face of Cyber Risk, found just 5% of carriers run simulated attacks and system failures to test their systems’ resilience. Just more than half—52%—of insurance executives surveyed reported that their organizations have produced threat models for existing and planned business operations. Less than half of the executives—47%—map and prioritize security, operational and failure scenarios. And only 14% said they consistently design resilience parameters into the operational models and technology architectures.

The survey also found that just a little more than one-third—38%—of executives “strongly agreed” that their organizations balance spending on iron-clad security measures and growth and innovation strategies. Some 49% “merely agreed,” indicating there is room for improvement in this critical area.

View the infographic that provides details of the insurance specific results.

Accenture’s 2015 Global Risk Management Study: North American Insurance Report provides more insight on how insurers can better prevent IT failures and cyber security breaches. For example:

  • 50% of respondents “strongly agreed” and 36% more “slightly agreed” that digital presents an opportunity to present the risk function as a business partner.
  • 44% of North American respondents say that their risk management functions, to a great extent, have the necessary skills to understand cyber risk. While that level of confidence was nine points higher than among insurers elsewhere in the world, it demonstrates that the risk functions at more than half of North American insurers either do not have this expertise or have not demonstrated it.

We also suggest insurers consider:

  • Embracing the digital ecosystem—Take advantage of digital capabilities and technologies outside of the enterprise to strengthen strategic decision-making.
  • Managing digitally— Develop the ability to orchestrate, in real time, the myriad internal and external services required for a multi-speed business and IT.
  • Institutionalizing resilience, because it is not a point-in-time initiative—Resilience must be part of the fundamental operating model, engrained into objectives, strategies, processes, technologies and the culture.

To learn more about the study, download Business Resilience in the Face of Cyber Risk (PDF).

2016 Latin America Insurance Outlook

Despite sluggish economic growth and troubling inflation in key markets, the 2016 insurance market outlook for Latin America remains relatively bright. The rollout of new insurance products and distribution approaches at a time of low market penetration should drive strong growth for insurers. Insurance premium growth is expected to rise by around 6% to 7% in 2016 and possibly beyond should the economic environment improve as expected. At the same time, the emergence of end-to-end digital capabilities is transforming the Latin American insurance market. This digital market disruption will force insurers to make rapid revisions to existing business models to stay competitive and build market share.

Customer expectations rising

Commercial customers will continue to require more sophisticated insurance solutions in 2016, including coverage for business interruption, cyber security, civil unrest and errors and omissions. Latin American consumers, many of whom are young, cosmopolitan and tech-savvy, will continue to push for new insurance channels and services that fit their lifestyle. To respond, insurers will need to simplify and adapt products for Millennials and sharpen their focus on mobile and social media interactions. Evolving customer needs throughout the region are compelling insurance companies to rethink their strategies, processes and services. The rise of financial technology, or fintech, companies is causing insurers, particularly in the consumer insurance sector, to reconsider their business models and increase their investment in new digital technologies. Despite a desire to avoid conflicts with legacy models, insurers realize that flexibility, efficiency and innovation are critical for success in a more demanding marketplace

Competition heating up

The liberalization of industry regulation across Latin America has opened insurance markets to wider competition. The abundance of insurance capital has intensified competition from various directions: from global insurers seeking a foothold in the region to local insurers looking to expand cross country to entrenched insurers defending their turf. These competitive trends are keeping insurance rates flat through much of the region and, in some cases, pushing them lower. The most substantial rate decreases have been in non-catastrophe property.

Pockets of premium increases can be found in areas of instability, such as Venezuela. However, insurance capacity is very limited for Venezuelan political risk, with most risks dependent on the international reinsurance market.

As markets develop in Latin America, commercial demand is increasing for new forms of insurance coverage, such as environmental liability. The opening of the oil industry to the private sector in Mexico, for example, is exposing new oil exploration and production entrants to potential losses from environmental damages. But market capacity is still restrained in key markets, such as Brazil, where only a few insurers offer such liability coverage.

Read our Market Outlook for LATAM Insurance in 2016 to understand more about the dynamics facing the South America Market here.