The move to a services economy in Australia is creating new risks for Australian businesses which, in turn, are creating opportunities for the insurance sector. Speaking at Lander & Rogers' client Economic Briefing in Melbourne, Chris Colahan, Chief Executive Officer of Berkshire Hathaway Specialty Insurance, Australasia, cited cyber risk as a topical example.
Mr Colahan noted that the risk of data being hacked, stolen or misused, has created a whole new industry for insurers with exponential growth potential. "Both within the insurance industry and externally, everyone is trying to work out the full extent of cyber risk and what to do about it," he said.
Lander & Rogers Insurance Partner Jon Hunt agreed, observing that, "The total annual cost of cybercrime in Australia has been reported at over $1 billion, with the focus of attacks shifting to small or medium sized businesses. The total cost of these attacks might actually be higher than the high profile attacks on large businesses, but they don't attract the same media attention."
Mr Colahan said that there is a current disconnect between business perception of cyber risk and take up of cyber insurance, commenting that, "If you ask executives of companies or their chief risk officers what their biggest risk concerns are, right now one of the top three to five is cyber, data protection, data integrity. Yet, while it is one of the top risks, it is one of the least insured risk events."
Speaking more broadly about the outlook for the insurance sector, Mr Colahan described the balance between the clear opportunities for growth in specific sectors of the economy, such as the services sector, against the levels of capital in the insurance market restricting some premiums. Asked overall about his perception of the insurance market, Mr Colahan was very positive about the opportunities, particularly for BHSI as a newer entrant in Australasia.