Making Insurance a Choice for Everyone

Posted on August 29, 2023 by Marijana Dabic

Discover how diversity, equity and inclusion are climbing up the agenda in insurance, with insights from Carlo Pozella, Learning and Development Manager, and Ellie Khan, Talent Acquisition and Inclusion Specialist. Originally published by Harrington Starr.

In today’s globalized world, the financial sector is being enriched by an influx of diverse talent, having made great strides in promoting diversity, equity and inclusion (DEI) in the workplace. But DEI isn’t one and done. In insurance in particular, we’re seeing a lot of potential – and positive intent – to improve.

Take today’s demographic of new starters. While many join insurance directly from university, gaining a degree isn’t mandatory. In fact, there are many ways to build a career, from apprenticeships to junior positions. Graduates will forever be a vital part of the industry, but as employers, we must acknowledge that university isn’t for everyone, and that many people never get the opportunity to attend.

Business need to be a real launchpad for individuals starting their careers—no matter their culture, gender or socioeconomic background—and they will see an increase in experienced, diverse talent joining the business, particularly across support roles where skills are more easily transferred between industry sectors. In this sense, DEI isn’t just the right thing to do. It’s a vital step in widening the industry’s talent pool, attracting people from all areas and building a workforce with real breadth of experience and skill.

Setting recruitment targets is a great way to create this level playing field and encourage talent diversity. The faster insurance as a whole opens up to new perspectives and ways of doing things, the more it stands to gain as diversity stimulates innovation.

Here, a modern recruitment journey is key. Have you tried posting job advertisements that aim to include, not exclude, by focusing more on general skills and experiences? How about offering brochures to interviewees so they can get a real sense of what the company is about? Or investing in immersive hiring skills training that goes beyond unconscious bias, to help interviewers operate in a way that’s fair?

As the world changes, our recruitment practices have to keep up. By creating a structured journey, it’s easy to offer consistency and accommodate different needs. An open interview process doesn’t exclude anyone, and simply means the business can hire the best person for the job.

There’s no quick way to enable equal opportunities for everyone everywhere. It’s a journey that starts with recruitment and goes on to influence how the entire organization operates.

If DEI ever was a tick-box exercise, today it’s so much more. With the right approach, insurance can pave the way for a host of new talent, and benefit from a vibrant blend of experiences, skillsets and perspectives. What better time to start than now.

Originally published in Harrington Starr’s ‘The Financial Technologist’. Get your free copy of the digital magazine here.

Source: www.cfcunderwriting.com

Future Trends Shaping AI Regulation

Posted on July 20, 2023 by Marijana Dabic

As artificial intelligence (AI) continues to transform industries far and wide, it’s time for regulation to catch up. Here’s how the landscape will change.

When you consider the impact of AI on our lives as consumers, it’s really no surprise that the industry worldwide is also being transformed.

Just as predictive text on smartphones uses language models to suggest words far faster than fingers can type, AI is making all kinds of business processes more accurate and efficient. But is AI developing too fast?

We’re not suggesting that AI will become uncontrollable and set out on world domination. But it does have key industry figures worried, such as the ‘godfather of AI’ Geoffrey Hinton, who resigned from Google over his prognosis of the direction of AI.

This is why we’re talking about an expanding regulatory gap. As AI continues to develop and improve ways of working, does the regulation currently exist to safeguard those involved in case of a mistake or fault?

Yes or no, as we increasingly use AI, what’s certain is that new exposures will emerge. This will cause big changes in how we approach the technology, as the global community looks to strike a balance between innovation and ethical considerations. Still, the best way of minimizing risk is to keep two eyes fixed on today’s rapidly changing regulatory landscape – and forecast where it’ll turn next.

The current state

Today, the global regulatory landscape is seeing different countries adopting different strategies.

Some nations have taken a proactive approach, implementing comprehensive frameworks which govern AI development and deployment. Look no further than the European Union’s (EU) General Data Protection Regulation (GDPR), crucial in setting standards for transparency, data protection and the right to explanation in AI systems.

Presently, the EU is looking to classify AI systems on the risk they may pose to users, with a sliding scale of penalties and enforcement actions. While China, with a fear that AI could undermine national unity, is racing to regulate. The country is drafting regulations that require companies to register generative AI products with their cyberspace agency and submit them to a security assessment before release.

Future trends

Globally, we are likely to see a greater focus on AI regulation centered around five key trends.

Harmonization
With the same AI products being used in multiple countries, it stands to reason that these countries will ramp up their collaboration efforts. As different regions work together to establish common standards and best practices for AI, this should also ease global cooperation and streamline AI development.

Ethical frameworks
Much of AI is unchartered territory, so the coming years will see more comprehensive ethical guidelines that address bias, fairness and accountability. It will become standard for organizations to implement measures that ensure responsible AI development and usage across their entire operations.

Transparency
To most of us, AI operates in a shroud of secrecy. But going forward, demand for transparency in AI algorithms and decision making will grow. Regulators will likely require organizations to provide clearer explanations for AI-driven outcomes. Particularly in industries like healthcare and finance, this will strengthen trust and mitigate the risk that comes with black-box AI systems. Already technology is emerging to assess the reliability of AI models.

Risk-based approaches
Focus is set to intensify on the potential harm AI can cause. Regulators will seek to identify and assess risks associated with AI systems, leading to targeted regulatory interventions – an approach that will foster innovation while safeguarding users against risk.

Constant adaptation
AI development shows no signs of slowing, and regulation will have to constantly evolve to keep up. As we look to build an agile regulatory framework, expect to see AI developers, industry experts and society at large collaborate closer than ever to deliver the flexibility that’s required.

Staying onside

Even as the regulatory landscape matures, AI will still introduce new exposures. Taking out the right insurance policy can protect organizations against their unique risks, and empower them to use and benefit from AI with confidence.

Traditionally, technology companies don’t consider their regulatory exposure as they’re not usually governed by bodies in the same way more typical professions are. But as technology pervades daily life, regulatory risk will undoubtedly grow into a much bigger exposure for emerging technology companies.

Source: www.cfcunderwriting.com

Construction Companies Insurance Needs

Posted on June 23, 2023 by Marijana Dabic

Methods of design and construction are evolving quickly in a sector that builds everything from skyscrapers and airport terminals to underground rail links and housing. But these projects come with significant risks that need specialist insurance.

Construction still relies on manual labour but is increasingly supported by sophisticated technologies embedded into every operational stage. To navigate today’s evolving exposures, businesses require insurance that is designed specifically for their unique needs.

Design and construction

Disputes over the specifications of a project and whether the design, build and/or materials used differ from what was initially agreed upon can escalate quickly. Perhaps the wrong materials were used or the physical construction does not have the same dimensions as those stipulated in the plans.

Errors and omissions (E&O)

E&O insurance provides cover for the costs associated with defending claims for losses arising from such mistakes. Insurance can also cover withheld fees during these disputes.

If a construction company is held responsible for injuring somebody or damaging their property, even if it was accidental or unintentional, it may face a civil claim.

Technology

Computer-aided design, building information modelling and AI-powered generative design are now part of everyday operations for design and construction companies of all sizes. So too are project management systems and procurement platforms.

If platforms fail or generate incomplete, inaccurate or inappropriate designs and/or models, it can stall projects and lead to losses. Insurance protects construction businesses from such losses and provides the support to manage any associated reputational fallout.

Cyber

Cyber attacks can freeze supply chains and put projects on hold. What’s more, they come in many different forms, from ransomware to phishing scams known to con construction companies into making payments against fake invoices or even deceiving account departments into changing account details to false ones, operated by the criminals.

Since construction businesses make regular payments to a wide variety of suppliers, they are an attractive target for fraudsters.

When cyber events hit, responding fast will limit impact and losses. Cyber insurance enables this response, providing access to the required expertise to act quickly and effectively, as well as the financial support to cover the associated losses.

Intellectual property

Intellectual property sits at the heart of many construction businesses, from the project plans they create to the products they develop or use under license.

New companies might try to piggyback on an established business’s brand, by using a similar name, slogan or logo. It’s easy to get too close and infringe on a competitor’s intellectual property.

Insurance helps to provide the expertise and financial support to pursue infringement claims against others and also to defend claims if construction businesses find themselves accused of infringement. The right cover also provides financial support for legal fees and settlements.

Source: www.cfcunderwriting.com

What the Future Holds for Open Banking

Posted on May 25, 2023 by Marijana Dabic

Open banking is still in its infancy, yet it has the potential to reshape the banking industry on a global scale. To take full advantage, it’s important for financial institutions to understand the risks involved – as highlighted in new recommendations from the Joint Regulatory Oversight Committee.

As the world turns towards open banking – a term used to describe the use of open standards, technology and APIs that allow financial institutions to securely share customer data with third-party providers – consumers are set to benefit from a host of new product and service innovations.

But for institutions far and wide, open banking isn’t so much tearing up the rulebook as it is writing a second volume, with just chapter one complete.

The current state of play

As things stand, open banking is mostly unchartered territory. The US open banking ecosystem lacks the privacy rules afforded to consumers in the traditional banking industry, introducing a series of technical and privacy challenges which may be enough to dissuade firms from entering the market.

Meanwhile, the UK market is more structured. Open banking was initiated in 2017, following an investigation conducted by the Competition and Markets Authority into retail banking. This was followed by the Second Payment Services Directive passed in 2018, which made it mandatory for banks to share their database with third-party providers via APIs.

With tensions around privacy, competition and data portability still taking center stage, the UK’s Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) acted as co-chairs of the Joint Regulatory Oversight Committee (JROC), to publish recommendations on its vision for the expansion of open banking in the UK. These recommendations not only shed light on the future of open banking in the UK, but they also show how other nations can enable open banking safely and successfully.

Laying the groundwork for success

With demand skyrocketing, open banking systems need to scale quickly if they’re to keep up. More than that, they need to become economically sustainable while remaining resilient, reliable and efficient. That’s no small task, so it’s no surprise the JROC recommendations state that strong regulatory direction is required to build an environment where a wealth of new products and services can emerge.

An open banking ecosystem depends on enhanced data sharing and collection. This encourages innovation and competition, but the ecosystem should also put protections in place if things go wrong. To mitigate the risks that come with open banking, financial institutions must understand the level of financial crime, their unique exposures and how to address them.

On top of the ecosystem and data sharing practices, the JROC is also set to prioritize payments. Creating a greater choice of payment methods would offer flexibility and more cost-effective alternatives to direct debits and card payments. The payments space needs a commercially sustainable model in place, along with the right dispute resolution processes.

Taking a proactive approach to risk

As new measures and infrastructure improvements are rolled out, we’ll see a fresh surge of product innovation in the FinTech market. This will lead to an increased use and reliance on open banking by consumers and businesses, resulting in a growth of total investment in open banking.

Open banking works as it empowers users to make better decisions about their finances through increased visibility of spending and financial health, while also making financial services more accessible. The JROC recommendations will lay the foundation for institutions to create new products and services. Both consumers and SMEs stand to gain from additional functionalities and the benefits of competition, including lower fees for payments and product innovation.

Source: www.cfcunderwriting.com

Does Cyber Insurance Cost Too Much?

Posted on April 27, 2023 by Marijana Dabic

We often hear that cost can make cyber insurance a non-starter for businesses. We get it; broad coverage comes at a price given the value of services provided with a policy these days.

So, CFC has listed below the 5 key reasons a cyber insurance policy, is worth the financial investment.

Cyber is a business’ largest exposure
We’re in a digital age and businesses no longer rely on paper trails and filing cabinets. This digital reliance has shifted a business’ assets from tangible to intangible, making them wildly accessible and opening even the smallest of businesses to a whole new era of risk.

Subsequently, most companies today state that cyber risk is in their top three, if not their number one business risk given their reliance on technology. Since the frequency of loss is that much greater for a cyber event than traditional perils, such as a fire – it makes sense that the cost of cyber insurance today will mirror a business’ largest exposure.

CFC has created a cyber risk heat map, which explains the varying levels by industry. Hint, nearly no business is safe!

Premiums are a fraction of the cost compared to a cyber claim
The price of cyber insurance may seem higher than expected given many still consider it a discretionary purchase, but when you compare the thousands, hundreds of thousands, or even millions in costs that cyberattacks can incur for business, it’s an easy decision to make.

And the severity of those claims continues to rise. According to the latest Coveware report, it’s been noted that fewer victims are paying ransomware demands, so threat actors are demanding more money to compensate for the lower hit rate, making individual claims more expensive.

This lower hit rate on ransomware has also meant hackers are pivoting back to previous attack techniques, with the likes of business email compromise attacks showing an increase of 147% across the second half of 2022 (for SME businesses).

A good cyber policy should offer proactive protection from attacks
At CFC, from the minute the policy is bound, their cyber security team works around the clock to protect businesses against cyber-attacks.

This is a proactive, protective service that identifies potential threats using insights from a variety of sources, including public and private threat intelligence feeds that go well beyond the usual outside-in scanning tools available to insurers. If a cyber security issue is found, their team will reach out through their Response app to work with a potentially compromised business, to eliminate the threat before it can cause harm.

To pay for this level of monitoring externally, a business would need multiple providers, all individually costing upwards of thousands every year. Whereas, all of this work is done for free, as part of the standalone CFC cyber policy, as well as expert incident response and recovery.

Expert incident response and recovery
One of the other critical elements of a cyber policy is the availability of in-house cyber incident response. At CFC, their team of cyber threat analysts, digital forensic specialists and incident responders, CFC Response, is available 24/7 to triage incidents, contain threats, and repair networks if a cyber incident occurs.

Cyber policies cover a lot
A good, stand-alone cyber policy, such as a CFC cyber policy, includes comprehensive coverage.

Many small businesses do not have access to enterprise-grade security teams, threat intelligence feeds that can inform them of whether they are listed on a threat actor’s target list, or access to a multi-disciplinary team of experts who know how to respond to cyber-attacks and compliment existing IT personnel.

Equally, should the worst happen, cyber insurance policies cover cyber incident response costs, including IT forensics, legal, breach notification and crisis communications to cybercrime costs that include social engineering, theft of personal funds and cyber extortion.

All told, this can cost anywhere from thousands to hundreds of thousands, and there is no limit to the range of support required during a cyber incident. CFC’s security team estimates that the average downtime following a ransomware attack can be up to 2-3 weeks, and that’s only with the expert assistance of a cyber incident response team provided by an insurer. With a broad policy, the insured can focus on getting their business back up and running, rather than worrying about what will and won’t be covered by their insurer.

It is estimated that that cyber-attacks will cost the globe $8 trillion dollars in 2023. Yet, we estimate, only less than 20% of businesses have taken out a cyber insurance policy as of today. Cyber insurers are not just there to step in after an attack has taken place, ready to pay the many external teams a business needed to pull in to recover.  Instead, coverage from a cyber insurer like CFC protects and prevents attacks on businesses from the minute they bind a policy.

Cyber insurance is not expensive, cyberattacks are. And with the right cyber insurance product, it should be the easiest purchase a business has ever made to cover its largest exposure.

Source: www.cfcunderwriting.com