NEW YORK — The potential costs of lost economic activity if businesses' computer systems go down are “stupendous,” said Michael S. McGavick, CEO of Dublin-based XL Group P.L.C.
Yet “nobody's taken that on” in the insurance industry, Mr. McGavick said Wednesday during a keynote address at the Professional Liability Underwriting Society's annual directors and officers symposium in New York.
The insurance industry must find a way to address this “and create value,” he said.
Cyber risks also have created “enormous” exposures that “we're not close to understanding,” Mr. McGavick said.
On another topic, he said international companies should have a global perspective on the regulatory front. Governments cannot enforce what they want to impose, which is why they use the liability system, Mr. McGavick said.
This is also why the U.S. Securities and Exchange Commission is requiring admission of wrongdoing by parties with whom it settles litigation alleging violations of securities law, he said. The public wants “more blood” because of the financial crisis, he said.
Mr. McGavick also said he anticipates more merger and acquisition activity in the insurance sector.
There are a “fair number of weak players that are kind of limping along,” he said.