By Ebere Nwoji
A report on the trend of risks, losses and claims from global financial services sector has showed that insurers in the past five years experienced highest quantum of losses and claims from risks associated with the COVID-19 pandemic, cybercrimes, compliance and environment social and governance trend (ESG).
The report, published by Allianz Global Corporate & Specialty (AGCS), a global corporate insurance carrier and a key business unit of Allianz Group, stated that the pandemic may drive market corrections and insolvencies – which could impact financial institutions’ balance sheets, increase exposures for directors and result in litigation.
The AGCS analysis of $1 billion of insurance industry claims showed that cyber incidents, including crime, was the top cause of loss.
“Insurers, see a rising number of losses from outages or privacy breaches with third-party service providers a potential weak link,” it added.
It further noted that compliance issues were already one of the biggest drivers of claims, adding that the burden has been on the upswing, particularly around ESG factors and climate change.
According to the report, in Johannesburg, London, Munich, New York, Paris, Sao Paulo and Singapore, financial institutions and their directors had to navigate a rapidly changing world, marked by new and emerging risks driven by cyber exposures.
In Nigeria, insurers recently disclosed that they have in the interim paid over N4 billion claims to businesses damaged by hoodlums during the endsars protest promising to pay the balance as the victims file their claims.
Furthermore, the AGCS report noted that the behavior and culture of financial institutions were undergoing scrutiny from a wide range of stakeholders in areas such as sustainability, employment practices, diversity and inclusion and executive pay.
It stated that the financial services sector was facing a period of heightened risks.
In the report, AGCS Global Industry Solutions Financial Services Director, Paul Schiavone, observed that the pandemic has caused one of the largest shocks to the global economy, triggering unprecedented economic and fiscal stimulus and record levels of government debt.
“Despite an improved economic outlook, considerable uncertainty remains. The threat of economic and market volatility still lies ahead while the sector is also increasingly needing to focus on so-called ‘non-financial’ risks such as cyber resilience, management of third parties and supply chains, as well as the impact of climate change and other environmental social and governance (ESG) trends.”
