Brussels, 12 April 2023: The Alta Signa Dach Team recently attended the GVNW Fachtagung - Focus Cyber und Financial Lines - conference in Cologne, Germany, and it was a chance to take a deep dive into the challenges and opportunities around these sectors of insurance in 2023. Here are the team’s key takeaways!
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“It was great to attend the market’s discussions at the Financial Lines GVNW Fachtagung in March in Cologne. There was much to talk about, not least the heightened and new risk environment that the financial lines and cyber markets now face thanks to geopolitical and economic volatility, including high inflation and still unfolding challenges in the global banking system.
These challenges are inhibiting the demand for capital market transactions, which have so far turned out to be meager this year, while at the same time raising the exposure of Directors and Officers insurance (D&O).
So it seems strange then that pricing of D&O risks is still softening or flattening at best - leading many insurance and risk professionals to wonder whether this is actually a positive trend? There is no doubt that financial lines insurance is a competitive marketplace, but premium pricing is now returning to levels we saw at the start of the pandemic thanks in part as well to to new capacity.”
Pricing: a race to the bottom on D&O?
“Attendees and speakers at the event were concerned that risks aren’t being appropriately priced as a result, and we have to agree. Captive solutions by policyholders were presented and discussed. However, due to the complexity of setting up captives and the fact that pricing is soft, this approach is not yet gaining a mainstream foothold.
Another key takeaway were the discussions around current case law on executive liability and D&O insurance. Unfortunately, the D&O market still has to be patient while it awaits a legally binding court decision in the matter of fine recourse against directors and officers that will set a precedent to the market. This topic has become even more important due to new laws (e.g. the Supply Chain Due Diligence Act) putting the spotlight on appropriate vetting of suppliers by a company’s appointed executives.”
Cyber discussions
“On the subject of cyber insurance, Prof. Staudinger addressed attendees about the highly interesting topic of covering reimbursement of expenses for cyber event ‘rescue’ costs in accordance with the BGB (Bürgerliches Gesetzbuch) and VVG (Versicherungsvertragsgesetz). This was certainly a potential new area of claims that a number of policyholders, brokers or underwriters had never seen before.
Cyber emergency management is becoming more and more important, and professional providers are springing up like mushrooms to deal with the growing and ever evolving threat of cybercrime.
Policyholders continue to have difficulties in obtaining suitable and affordable insurance cover and therefore prefer to invest in their own IT security systems as a means of cyber risk mitigation. This, in turn, is making some D&O insurers nervous, as this management decision may be considered in retrospect to be the wrong decision in the wake of a cyber incident, with the possible consequence of corresponding claims against management.”
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These were our key takeaways from a very interesting, informative and engaging networking event. Our heartfelt thank you to the entire GVNW team and the well-chosen speakers for the all-round successful conference!