Last week the media reported how a Kenyan was milked dry by a well-orchestrated SIM swap fraud carried out. The victim lost Sh2.6 million in the unfortunate event. That is a snapshot of the dangers of cybercrime at a micro-level. At a macro-level where banks and large businesses are involved, the situation is dicier.
As we celebrate the Micro, Small and Medium-sized Enterprises Day (MSMEs) this month, let us pay attention to this challenge.
As we know small businesses have been most affected since the outbreak of the pandemic, making the reinsurance sector an increasingly challenging market. This has a ripple effect on the banks and the insurance sector that protects them and by extension the reinsurance companies that safeguard these insurers.
This may force reinsurance firms to focus on an aggressive collection of premiums from underwriters and brokers while shoring up investment business — a sad state of affairs.
Yet the environmental challenges continue with the announcement that Covid-19 is again beginning to claim a seat in discussions with a spike of more than 150 new cases in May. But more outstanding is the silent and growing impact of the Ukraine-Russia war on Kenya as well as cybercrime incidents.
The future of business, therefore, requires a well-spirited approach for both insurance and reinsurance players.
Many insurers and reinsurers are beginning to shy away from complex emerging risks, calling for the emergence of new players to take upon the issues shunned by the traditional market. The landscape is still bristling with brazen challenges that ultimately affect corporate delivery chains.
Reinsurance is by description a form of risk transfer in which one insurance company buys insurance from another to cover part or all of its risk exposure. In simple terms, it is the purchase of one insurer’s losses by another.
It is the enveloping of the dangers of one industry by a confident firm that believes in its ability to underwrite a challenge. This is the space that Reinsurance Solutions plays.
As a key player in this sector, we provide innovative insurance, reinsurance and risk management solutions.
The team of expertise lies in property and casualty, life and health, employee benefits and financial services helping us leverage our extensive global experience to provide clients with tailored solutions that meet the demands of today’s dynamic markets.
Having been in existence in Mauritius since 1997, and with local offices in Nairobi, we have underwritten many firms and have helped grow similar successful footprints in Ivory Coast and South Africa.
Reinsurance Solutions has been recognised as providing bespoke and innovative, dynamic and agile solutions in addressing the call for innovative solutions. But no one has all the answers.
Reinsurers now have to address several challenges, including the pandemic, climate change and cybercrime risks, with the latter posing a widening and growing threat to the entire industry.
The coverage of cyberattack risk remains largely underdeveloped and inadequate and more players should join us to pay attention to this danger.
A large-scale attack, God forbid, would cripple the entire planet and cost the insurance industry dearly.
According to Standard & Poor’s, malicious attacks cause more than $700 billion in losses yearly to companies, while insured damages represent only $5 billion, which is less than one percent of the total losses. This calls for more attention to the issue.
In this increasingly unpredictable world that is being shaken by newer risks, it is sometimes difficult to model.
In this context, players find that the solution is to diligently act in tightening the market.
This sometimes calls for undesirable upward rate adjustments to help cope with the increase and intensity of risks and the decline in profitability.
But demand for reinsurance coverage remains high in the region. Due to the higher cost of claims, this increase in demand affects most classes of business.
Demand for tailored and non-traditional solutions is unfortunately influenced by the hardening pricing environment. Cleverly structured solutions can give clients the cash flow protection they deserve.
By working proactively to tackle emerging and ever-changing risks such as cyber and environmental, social and governance, any industry can be safeguarded.
Public service vehicle insurers, for example, can make good on the requirement for all boda boda motorbikes must purchase comprehensive insurance. Digital platforms and telematics will be the solution to profitable and sustainable insurance products for this new group.
Using such individualised bespoke solutions for current and future risks, reinsurance firms come to protect firms to gain security during the changing times.
But to offset the deeper impact of the pandemic, and the looming danger of cyber invasions, reinsurers are now focusing on aggressively building stronger premium collections from underwriters and brokers, while shoring up investment business.
The reality of our times means that we must also pay attention to the problem of telcos-based crime and cybercrime that could creep on any of us at any moment.