The private sector cannot provide cover for the greatest systemic cyber risks, such as the failure of critical infrastructure or cyber war. But a potential solution to this complex problem is a governmental backstop – a precautionary measure of last resort, Munich Re said
Munich:
The rising incidence of extreme weather resulting in high losses continues and more frequent extreme weather calls for more insurance cover, said Munich Re, the largest reinsurer in the world.
“The private insurance industry supplies enough global capacity in principle to cover the rising risks associated with extreme weather. But prices for cover must be appropriate in order to create incentives for better preventative measures,” said Munich Re adding that Munich Re will keep offering sufficient insurance capacity for such risks, with an eye to sustained growth in this market.
Superior prevention can substantially reduce the losses caused by extreme weather events, in turn easing the financial burden on society. And governments can certainly exert a positive influence on insurability and the price for insurance cover by way of state-mandated preventative measures, elaborated the reinsurer..
Backstop for major systemic cyber risks
Government involvement is also necessary in the area of cyber risks as the management of cyber risks is of paramount importance in a digital world.
“Despite the global market for cyber insurance tripling in size in the past five years alone, a tremendous gap in coverage remains regarding cyber risks. In its role as global market leader, Munich Re is always investing in expertise and accumulation modelling – and will continue providing sustainable capacity for insurable cyber risks,” said the company.
However, the private sector cannot provide cover for the greatest systemic cyber risks, such as the failure of critical infrastructure or cyber war. But a potential solution to this complex problem is a governmental backstop – a precautionary measure of last resort. Policymakers in Germany and Europe as a whole should discuss such a backstop; a dialogue on this is already underway in the United States, suggested the reinsurer.