Risk Management

Special Report: Commercial Insurance at the Crossroads

The commercial insurance industry lags behind the complex needs of corporate buyers.
David KatzApril 3, 2017

Each day, it seems, fresh reports of the nation’s inability to respond to Russian attacks during the 2016 U.S. presidential campaign spotlight what may be a vast asymmetry between cyber risks and our institutions’ ability to handle them. Although the biggest news of cyber threats has lately centered on the political sphere, however, corporate America has for years been a target of large-scale hacking.

Innovation, creativity, ideas, brainstorming, solutions business concept with word cloud.

Further, the corporate sector, just like the government, has lagged in its ability to defend itself against the increasingly dynamic, centralized hacking underworld. Nowhere is this gap more apparent than in the commercial insurance industry, where corporations have looked in vain for help in curbing cyber attacks.

Well-known for their tendency to package risks, business insurers have only lately begun to wake up to their customers’ demands for new approaches to cyber exposures that can’t be so easily “commoditized.”

And the problem, reportedly, isn’t limited to cyber risks. Other complex, fast-evolving threats such as damage to global supply chains and company reputations are met with the same cookie-cutter approach. Critics also portray the industry as lacking in the innovative juice needed to keep up with beneficial technological advances like the Internet of Things.

Still, commercial insurers are not in business to lose money, their defenders argue. While their customers crave innovation and customized underwriting, that involves more costs and lost time than insurers can reasonably absorb, some experts say.

In this special report, our contributors explore the complicated tug-of-war between the buyers and sellers of commercial insurance. While the future outcome isn’t precisely clear, what is apparent is that it will depend on the ability — and the will — of both corporations and insurers to invest in innovation.