While all middle market businesses across the world have concerns about cyber risk, few of these firms view it as their biggest exposure, according to a global survey* of 68 leading independent insurance brokers, which gauged the concerns of their domestic commercial clients.
Indeed, client concerns about cyber risk are often surpassed by other issues, according to the survey, which was conducted by Columbus, Ohio-based Assurex Global of its partner firms around the world.
Nearly half (49 percent) of the brokerage executives surveyed identified “cyber and technology risks” as one of the top three exposures facing their clients, followed by talent recruitment and retention (43 percent), rising employee benefit costs (41 percent), and natural disasters (40 percent).
However, when asked to narrow their choice to the single most significant risk confronting their clients, nearly one in four executives (24 percent) identified talent recruitment and retention as the top risk for their clients, followed by natural disasters (20 percent), and rising employee benefit costs (17 percent). Cyber risk, which was cited as the biggest exposure by only 9 percent of the respondents, dropped to fourth place.
“It’s clear that cyber risk is universally on the minds of business executives at middle market companies around the world, many of whom readily rank it among their top three exposures,” said Jim Hackbarth, CEO, Assurex Global. “Yet, when you drill down to what really keeps their clients awake at night, the same executives will answer differently, depending on where in the world their clients are located and do business.”
Risk issues identified by the survey include:
- Natural disasters.While the responses to the Assurex Global survey varied by region, natural disasters raised the biggest concerns in areas outside the U.S. and Canada. Natural disasters are considered to be the top risk in Asia/Pacific, Latin America and EMEA (Europe, the Middle East and Africa). For instance, natural disasters were the single most significant exposure among 57 percent of brokerage executives located in the Asia/Pacific. Next among these survey participants was supply chain risk (29 percent), which in some respects is disaster-related.
Similarly, in Latin America, natural disasters were considered the top risk by 40 percent of those in the survey, followed by cyber risk, talent retention and recruitment, and supply chain related exposures, each of which was identified by 20 percent of the respondents.
Meanwhile, among brokerage executives whose firms are located in EMEA, natural disasters were cited by 16 percent, with the same percentage identifying rising employee health care costs as the top risk; 11 percent identified each of the following: cyber and technology exposures, talent recruitment and retention, and financial markets turmoil.
At the same time, an overwhelming majority (92 percent) of brokers whose clients consider natural disasters their biggest exposure indicated these firms are purchasing or increasing related insurance coverage. More than half (53 percent) also noted clients are strengthening risk control, such as resiliency and business continuity planning, and 39 percent cited risk assessments and impact analysis.
- Talent recruitment/retention.Across the U.S. and Canada, talent recruitment and retention was the most significant exposure, cited by 38 percent of those in the survey. Next were rising employee benefit costs (23 percent), natural disasters (11 percent), and cyber and technology exposures (9 percent).
When respondents around the world were asked what steps their clients are taking to manage their biggest risk, 81 percent of those identifying talent recruitment and retention indicated clients are increasing employee training and education; 56 percent cited efforts by clients to improve internal and external communication and 31 percent reported clients are reinvigorating their branding efforts.
To combat rising employee benefit costs, 57 percent of brokers noted clients were assuming more risk while 44 percent indicated clients were lobbying for reform, the same percentage that noted clients are improving communication.
- Unaffordable cover and insufficient capacity.When asked what coverage line was most in need of “disruption,” or major change, employee health care insurance drew the largest response, cited by 34 percent of those surveyed, all identifying unaffordable insurance costs as the underlying problem. Another 15 percent viewed property catastrophe insurance as most in need of disruption; of these respondents, 60 percent cited lack of available insurance. In addition, unaffordable coverage and insufficient capacity, were both cited by 40 percent as reasons for their response.
Cyber liability insurance was cited by 9 percent of survey participants, primarily due to coverage restrictions or exclusions (33 percent) and lack of availability to all classes of business (33 percent).
* The survey was conducted during February and March 2016.
About Assurex Global
Assurex Global is a partnership of prominent global independent agents and brokers. With $28 billion in annual premium volume and more than 600 partner offices, Assurex Global is the world’s largest privately held commercial insurance, risk management and employee benefits brokerage group.
Source: Assurex Global
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