Global Survey of Independent Insurance Brokers Finds Top Risk Issues Vary by Region
While Concerns about Cyber Risk May Be Universal, Few View It as Biggest Exposure
COLUMBUS, OHIO – Middle market businesses in different regions of the world vary significantly in what they perceive as the most significant risks facing their enterprises. A new survey of senior executives at 68 leading independent insurance brokers whose commercial clients operate primarily within their own countries finds widespread concerns about cyber risk are often trumped by what these firms see as larger exposures.
In the survey, conducted by Assurex Global of its partner firms around the world, nearly half (49 percent) of the brokerage executives identified “cyber and technology risks” as one of the top three exposures facing their clients, followed by talent recruitment and retention (43 percent), rising employee benefit costs (41 percent), and natural disasters (40 percent).
However, when asked to narrow their choice to the single most significant risk confronting their clients today, results were skewed and cyber risk, cited as the biggest exposure by only 9 percent of the respondents, dropped to fourth. Instead, nearly one in four executives (24 percent) identified talent recruitment and retention as the top risk for clients, followed by natural disasters (20 percent), and rising employee benefit costs (17 percent).
“It’s clear that cyber risk is universally on the minds of business executives at middle market companies around the world, many of whom readily rank it among their top three exposures,” said Jim Hackbarth, CEO, Assurex Global. “Yet, when you drill down to what really keeps their clients awake at night, the same executives will answer differently, depending on where in the world their clients are located and do business.”
Natural disasters considered top risk in Asia/Pacific, Latin America, EMEA. While the responses to the Assurex Global survey varied by region, natural disasters raised the biggest concerns in areas outside the U.S. and Canada. For instance, among brokerage executives located in the Asia/Pacific, natural disasters were the single most significant exposure, cited by 57 percent. Next among these survey participants was supply chain risk (29 percent), which in some respects is disaster-related.
Similarly, in Latin America, natural disasters were considered the top risk by 40 percent of those in the survey, followed by cyber risk, talent retention and recruitment, and supply chain related exposures, each of which was identified by 20 percent of the respondents.
Meanwhile, among brokerage executives whose firms are located in EMEA (Europe, Middle East and Africa), natural disasters were cited by 16 percent, the same percentage identifying rising employee health care costs as the top risk; 11 percent identified each of the following: cyber and technology exposures, talent recruitment and retention, and financial markets turmoil.
Talent recruitment/retention, health care costs top concerns for U.S/Canada. Across the U.S. and Canada, talent recruitment and retention was the most significant exposure, cited by 38 percent of those in the survey. Next were rising employee benefit costs (23 percent), natural disasters (11 percent), and cyber and technology exposures (9 percent).
When respondents around the world were asked what steps their clients are taking to manage their biggest risk, 81 percent of those identifying talent recruitment and retention indicated clients are increasing employee training and education; 56 percent cited efforts by clients to improve internal and external communication and 31 percent reported clients are reinvigorating their branding efforts.
At the same time, an overwhelming majority (92 percent) of brokers whose clients consider natural disasters their biggest exposure indicated these firms are purchasing or increasing related insurance coverage. More than half (53 percent) also noted clients are strengthening risk control, such as resiliency and business continuity planning, and 39 percent cited risk assessments and impact analysis.
To combat rising employee benefit costs, 57 percent of brokers noted clients were assuming more risk while 44 percent indicated clients were lobbying for reform, the same percentage that noted clients are improving communication.
Employee health care insurance needing “disruption.” Not surprisingly, when asked what coverage line was most in need of “disruption,” employee health care insurance drew the largest response, cited by 34 percent of those surveyed, all of whom identified unaffordable insurance costs as the underlying factor. Another 15 percent viewed property catastrophe insurance as most in need of disruption; of these respondents, 60 percent cited lack of available insurance. In addition, unaffordable coverage and insufficient capacity, each was cited by 40 percent as reasons for their response.
Cyber liability insurance was cited by 9 percent of survey participants, primarily due to coverage restrictions or exclusions (33 percent) and lack of availability to all classes of business (33 percent).
The survey was conducted during February and March 2016.
About Assurex Global
Founded in 1954, Assurex Global is an exclusive partnership of the most prominent independent agents and brokers in the world. With $28 billion in annual premium volume and more than 600 partner offices, Assurex Global is the world’s largest privately held commercial insurance, risk management and employee benefits brokerage group. An international insurance powerhouse, the partnership combines the local expertise and global reach of international brokers on six continents.