The dual nature of technology as both opportunity and threat to the insurance field are among the main things that a quartet of insurance CEOs said can "keep them up" at night.
"The thing that makes me worry the most is how technology could disrupt this industry, and the thing that makes me most excited is that we can use technology to do a much better job with providing protection to a lot more Americans," MassMutual CEO Roger Crandall said on a panel at the National Association of Insurance Commissioners' 2019 International Insurance Forum. He added that the biggest single thing he worries about is how technology has "yet to really change" the insurance industry.
"I think a big thing to think about is ... harmonization," Crandall said. "We are heading down a path right now where we have the potential of a lot of different regulations by state and that adds complexity, and complexity adds cost, and that makes it harder to achieve the societal objective of providing protection for all Americans."
Deanna Mulligan, CEO of Guardian Life Insurance Co. of America, added that she thinks a lot about the rising tide of data and its effect on actuarial science in particular.
"I think the field of data science is going to change the actuarial field a lot, and that means we're all going to have to keep up with that or stay ahead of that," Mulligan said. She noted that a lot of industry standards depend on actuarial science, and said it will be something the industry has to figure out how to deal with.
Meanwhile, one of the greatest concerns for American International Group Inc. CEO Brian Duperreault is cyber. He called the constant morphing of cyber problems one of the most significant issues for a risk taker.
About 80% of cyberrisk has been centered in the U.S., but markets in the EU and the U.K. are seeing fast growth, Gareth Truran, head of London market supervision for the U.K. Prudential Regulation Authority, said on another panel focused on cybersecurity.
Cyber premiums in the U.K. have grown at an annual rate of 20% to 30% for the past several years, Truran said. That has been driven in part by legislative requirements that companies take cyberrisk more seriously, but also by the rise in cyber-related losses, he added.
Lori Bailey, global head of cyberrisk in commercial insurance for Zurich Insurance Group AG, also sees the interconnected nature of cyberrisk as something that is propelling growth.
"We're starting now to see that shift from what used to be more data-breach driven to business interruption," Bailey said. "Even if an entity is not a direct recipient, that interconnectivity we see on the insurance side as being a driver of demand going forward."
Bailey also pointed out that there is a "huge and growing" fiduciary responsibility for a company's board of directors and executives to ensure that a cybersecurity plan is in place. Fiduciary responsibility combined with the increased risk of exposure are also driving growth in the sector.
Asked during the CEO panel discussion what the next financial crisis would look like and what risks are most concerning, Pina Albo, head of Hamilton Insurance Group, said cyber is at the top of the list.
"If you don't have some form of robust framework about cybersecurity in your organization, that's walking a fine line," she said, noting that cyberrisk cannot be contained geographically.