Parisi: No room for complacency after near misses

Cyber insurance market participants must still be wary of the potential impacts of cyberattacks following a series of near misses in recent years, Munich Re’s head of cyber solutions for North America has said.

In an interview with The Insurer TV, Bob Parisi said the WannaCry and NotPetya ransomware attacks of 2017 as well as the July 2024 CrowdStrike incident had the potential to create significant issues “but that pandemic didn't happen”.

Specifically, Parisi said those affected by the CrowdStrike incident were able to adjust quickly and the impact of the fault was not long-term.

“So, what I think a large portion of the market is viewing is that those near misses don't necessarily always equate to ‘Aren't we really good underwriters?’” he said.

Munich Re had previously said the CrowdStrike incident, which stemmed from a faulty security update from cybersecurity firm CrowdStrike, would not influence its full year 2024 earnings.

However, Parisi warned that, “slight tweaks” to these events could have created a “very different scenario”.

“I think the market looking at those [events] as indicators that we're doing everything right is probably the wrong thing to focus on,” he said.

Parisi also explained how the acceleration of the softening of the reinsurance market has decreased in a “mixed market”.

“There are accounts that are getting deals that you might think, ‘Well, that seems to be too cheap’, but the market is starting to get better at differentiating between where the corrections need to be made.”

He cited Munich Re’s focus on its “main mantra” of sustainability rather than just pricing as an example.

“When you look just at pricing, you lose perspective of the other things that are going on”, he said.

Parisi added sustainability at the firm revolves around how it can access improved modelling and “what are the good indicators for companies that are resilient”.

“A lot of people talk about cybersecurity, and that's good, that's how deep is the moat and how high is the wall.

“But that doesn't tell you if they can fight off the barbarians after they get into the perimeter. Resilience talks about how you can function in the concept of that crisis.”

Parisi also addressed the development of AI, and admitted the idea that somebody may create an AI underwriter “scares the hell out of me”.

Recent research from EY indicated AI is gaining traction in the (re)insurance sector, particularly in underwriting. Specifically, it found that initial underwriting applications in the specialty and reinsurance space have focused on data ingestion, risk assessment and triage.

“I'm old enough to have seen a lot of technology develop, and there can be a lot of overzealousness,” Parisi said

“There can be a lot of people being overly scared about new technology, and I think that's what AI has engendered.”