The mismatch between insurers’ business appetite and the risks presented by growing cyber risk could destroy the profitable German group Munich Re as insurers ignore the threat, its top two executives said on Monday.
The firm’s outgoing chief executive Nikolaus von Bomhard and board member for future projects Torsten Jeworrek warned attendees at a conference in Lagos that governments were not effectively managing the risks of cyber attacks, home invasion and pollution.
If insurers continued to underinvest in security, the cyber risk that was not being managed properly could destroy their profitable business, they said.
Cyber attacks have cost organisations billions of dollars and have prompted a series of large data breaches.
In the European Union, 83 million personal data records have been lost or stolen since 2004, according to European data protection body OLSI.
“There are risks of home invasion by armed burglars which produce big insurance claims but cyber attacks represent the greatest danger,” von Bomhard told the Africa insurance and reinsurance conference.
Munich Re estimated last year that around 70 billion euros ($82 billion) in economic losses from cyber attacks could be avoided through investments in cyber resilience.
Von Bomhard said the insurer could not see an immediate indication of a return on the investment but acknowledged cyber insurance could even become profitable in the longer term.
“For those insurers which ignore this threat and underestimate the risks it can have a huge impact,” he said.
Von Bomhard will be replaced by the current head of Munich Re’s life insurance division Joachim Wenning, on Feb. 22. Jeworrek will succeed von Bomhard on April 2.
Andrea Miteski, PhD and MD in the field of reinsurance. Long term senior insurance executive with specialization of reinsurance optimization.