III CEO: Insurers Can Partner with Law Enforcement, Government on Cyber
Insurers can play a role in mitigating cyber risk, but may need to partner with law enforcement and governments, said Sean Kevelighan, chief executive officer, the Insurance Information Institute.
Q: What's been on your agenda in the last year?
A: We've been really evolving a lot of issues, most notably, an issue of climate risk and resilience. We've had a lot of activity around it. We've done a lot of events: we did a town hall with some members of the Biden administration; there was a large documentary that was featured on mainstream television. What's exciting, though, is we're beginning to understand and inform the discussion and how insurance can lead through this important topic. And so that's been great to kind of come out. In fact, we had a meeting earlier with our executive committee leadership committee. And we all really understood that we have a long ways to go to continue to inform this discussion. But insurance has a real opportunity in terms of helping mitigate risk and making people and communities more resilient.
Q: Cyber has been a big piece of your agenda. Can you tell us what you're seeing there?
A: Cyber is everywhere. Right now, it's growing in terms of impact. It's increasing in terms of its cost for insurance. We read recently that the costs quarter-over-quarter went up over 90% for purchasing cyber insurance. It's getting much more complex.
What we're interested in is what the role of insurance is and is not — where we need to look at partnerships with the likes of law enforcement and government — but also helping our customers mitigate the risk. We did a survey a couple years ago on this issue. And what came back to us is people weren't willing to pay that extra price, even though they're seeing the increased risks. So we have a ways to go to inform this discussion and help people understand that there's a role for insurance. But there's a role for government, there's a role for mitigation.
Q: What's on your agenda for 2022?
A: The evolution of the climate risk discussion will certainly be top of mind for us. We want to make sure that we continue to inform others about the role of insurance, but the role that they also play as customers and communities to become more resilient — that will be important for us to inform them. Cyber, as you mentioned, will be on our agenda that is not going away. Hopefully, we won't enter into a large event. But we certainly have some a ways to go to inform people about what that might mean and whose role is what, at that time.
And then we've got some runaway litigation, which some might call social inflation, so helping people understand what's happening here, what the impact is on society, and that we need to do something about it. It's really become almost appalling that we're doing things like financing litigation through third-party sources. And then finally, what goes into pricing insurance is often misunderstood. Some people call it risk-based pricing, what it means, how it works, why it's accurate — just to get getting people comfortable with some of those complex mechanisms that are insurance, but are important to have, but also important for people to understand and be comfortable with.