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Technology-based exposures force risk managers to adapt

Posted On: May. 15, 2017 3:06 PM CST

Risk managers must adapt to new exposures brought about by the rapid pace of technological change over the past several years, a panel of experts said.

The speed of communication, the evolution of cyber coverage and the insurance claims process are all affected by numerous changes in the technological landscape, they said.

One technology change that has had a major impact on risk managers in recent years is the increasing speed of communication facilitated by the internet. “Even though communication is usually just about talking with one another, using that to gather information and gauge what’s a risk is much quicker than we would have been able to do many years ago,” Brian Dusek, a Chicago-based partner at law firm McCullough, Campbell & Lane L.L.P., said Thursday during a panel discussion at the 2017 Annual Hines Symposium in Chicago.

Taking time to understand what’s happening internally at an organization is one way the insurance and claims services industries should respond to the changes, panelists said.

“When you’re going to approach the insurance market, you’re building a product that is specifically tailored to that client's needs,” said Matthew Danielak, a Chicago-based professional, security and privacy, and media liability specialist at Willis Towers Watson P.L.C. “You're not going to pull something off the shelf and give them a one-size-fits-all product, because that’s not going to work for every client.”

Mr. Danielak said the insurance market should go “above and beyond to understand just how a company operates, where their pressure points are within the organization and where their biggest exposures lie.”

The market is reactionary, he said, and as exposures and claims have evolved so have cyber insurance policies.

Another way the insurance market has responded is by helping clients figure out “what they need that they don’t know they need,” said Mr. Dusek of McCullough. “Part of that depends on the broker and part of that depends on helping the entity identify … what are the most important aspects of where you’re housing your data, what are the risk management elements that you could be doing,” he said. 

Going forward, experts say they would like to see policies that are more integrated.

“Everybody here is comfortable with physical damage losses,” said Christopher Brandt, Kenosha, Wisconsin-based senior risk analyst at biotechnology company Shire P.L.C. “What about nonphysical damage losses that shut down your machinery or steal your data? How do you respond to those? Are they in a cyber policy or a property policy?

“Historically they are excluded because there is no physical damage if somebody broke into your system and shut you down,” Mr. Brandt said.

On the workers compensation claims side, when an event has already occurred, “Our job becomes making the experience of the injured worker ... a better environment,” said Kevin Annarella, Chicago-based assistant vice president of client services at Sedgwick Claims Management Services Inc. “We have to embrace technology. One of the ways we are adapting is by making self-service options available, making app-based items for not just the claimant to check in on the status of a claim ... but also for the medical providers to be able to find out the status of a bill. They don’t want to pick up the phone like they used to. In this day and age, they want that instant gratification.”