Cyber-attacks, terrorism and new compensation structures for long-term bodily injuries are all emerging risks facing the (re)insurance sector, according to a report from Guy Carpenter.
According to the report, cyber-attacks are now seen as one of the most serious economic and national security challenges facing governments around the world.
They also present a set of aggregations and accumulations of risk that spread beyond the corporation to affiliates, counterparties and supply chains.
Companies are uncertain of how much coverage to acquire and whether their current policies provide them with protection.
Marsh has estimated that the US cyber insurance market was worth $1 billion in gross written premiums in 2013 and could reach as much as $2 billion this year.
The European market is currently a fraction of that, at approximately $150 million, but could reach as high as $1.1 billion by 2018, according to some estimates.
Earlier in 2014, Guy Carpenter launched its Cyber Solutions Specialty Practice, which focuses on the development and delivery of cyber reinsurance solutions to address the rapidly increasing risks associated with cyber security.
Given the growing population, regional conflicts, the expansive reach of social media for extremists to spread their messages and recruit, as well as the diversity of possible attack modes to cause human and economic loss, Guy Carpenter has also cited terrorism as an emerging risk.
Currently, there is uncertainty in the US terrorism market coming from the fact that the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) is scheduled to expire on 31 December 2014 and US lawmakers are still yet to authorise a renewal program.
Finally, Guy Carpenter found that compensation for provision of long-term care for bodily injury is becoming an increasingly challenging problem for society in general and insurers in particular.
For severe bodily injury cases in the UK, claimants are now highly likely to opt for an annuity/periodic payment order rather than a lump sum.
As a consequence, the uncertainties that previously had been transferred to the claimant are now retained by the insurer and to a certain extent, its reinsurers.
