Insurance Markets and Risk Priorities in 2019

Increasingly complex geopolitical, environmental, and technological risks are topping business leaders’ list of concerns, according to panelists on Marsh’s New Reality of Risk® webcast.

Troubling international relations, climate change and extreme weather events, and large cyber-attacks were identified in the 2019 Global Risk Report, produced by the World Economic Forum with support from Marsh, as some of the top perils the world is facing. And audience members participating in a poll during the webcast agreed: Close to 40% said large cyber-attacks are their organization’s top business risk in 2019, followed by extreme weather events and natural catastrophes. These risks are also having an increasingly negative psychological effect on people, organizations, and communities, said John Drzik, president of Global Risk and Digital at Marsh, leading to political strife, labor disruptions, and social media backlashes.

In the face of this complex risk environment, Drzik highlighted three actions that risk managers and C-level executives should take:

• Focus on rigorous scenario planning.
• Build an effective crisis management playbook.
• Consider strategic adaptation to geographic shifts and other changes in the risk landscape.

Angela Duca, Marsh’s US Political Risk and Structured Credit Practice leader, gave a glimpse into Marsh’s soon-to-be-published 2019 Political Risk Map. She noted that political risks in many Latin American countries have improved, though the African region has experienced some notable deterioration along with significant improvements. Tensions between the US and China, Iran, North Korea, and Russia continue to be problematic. “Clients should be turning to political risk coverage now, to protect their interests and provide certainty of cover in this turbulent global political climate,” Duca said, adding that despite turbulent global relations, 2018 was a quiet year for the political risk insurance market, with no market-moving losses.

In other lines of coverage:

• Pricing increased for some property insurance buyers, noted Duncan Ellis, Marsh’s US Property Practice leader, adding that many insurers are trying to refocus on underwriting discipline and profitability.
• Casualty market capacity remains abundant, said Dan Aronson, Marsh’s US Casualty Practice leader, but accumulating losses are driving insurers to push for higher rates in some lines and impose some restrictions on limits and terms and conditions.
• There is also abundant capacity in the directors and officers liability market, although some companies have seen pricing increases, especially in excess layers, Kendall Voss, Marsh’s Northeast Zone FINPRO leader, said.
• While cyber insurance pricing is competitive and buyers are getting more for their premiums, Rob Salinardo, US placement leader in Marsh’s Cyber Center of Excellence, warned that this trend won’t go on forever.

Listen to a replay of the webcast.