Cyber leads risks for insurers in North America, Bermuda

Cyber risk is the top risk faced by insurers in North America and Bermuda, according to a survey released Wednesday by London-based think tank Centre for the Study of Financial Innovation.

The survey, “Insurance Banana Skins: The CSFI Survey of Risks Facing Insurers,” found that among all global insurers surveyed, regulation ranked first among risks, followed by the macroeconomy and interest rates, with cyber ranking fourth.

But for North America and Bermuda insurers, cyber risks, regulation and interest rates topped the list.

Cyber is a new risk, having not appeared on the center's previous “Insurance Banana Skins” survey published in 2013.

“The most striking new theme to emerge from this survey is the high level of anxiety about cyber risk, specifically software failure and data security breaches,” said the report.

“The chief concern is the security of the ever-growing volumes of data that insurers hold in cloud-based storage systems,” said the report. “For many, major breaches are inevitable; the question is how much damage they will cause.”

“Cyber risk is the No. 1 banana skin for participants from nonlife businesses, as well as being high up the list for reinsurers and life insurers,” PricewaterhouseCoopers L.L.P., which sponsored the report, wrote in the foreword.

The report was based on the responses of 806 property/casualty insurers, reinsurers, brokers, life insurers and observers in 54 countries surveyed during March and April.