ESG, cyber risks and AI big topics in Asia: Beazley spotlights key insights

As emerging threats and technologies such as artificial intelligence (AI) reshape the risk landscape, the emphasis on expertise, foresight, and long-term relationships has never been more important. Asian markets are seeing a strategic shift in response to changing dynamics, Jessica Schappell, head of Asia-Pacific at Beazley, told SIRC Today.

“Market headwinds are giving clients a different perspective and making relationships more sophisticated in Asia,” Schappell said. “They’re choosing their insurance partners wisely, and it’s up to us to prove our value as more than just transactional entities.”

Speaking from experience in a region that’s home to some of the world’s fastest-growing economies, Schappell said: “To truly revolutionise re/insurance, we need to change how people think about insurers—from being reactive players to proactive partners, bringing expertise and a broader, strategic view to the table.”

Cyber attackers are becoming smarter

One of the most urgent challenges facing insurers is the impact of AI on cyber risk. Teck Siong Ng, regional manager for Asia-Pacific cyber risks at Beazley, paints a vivid picture of the current state of play.

“AI has made phishing look more genuine,” he explained. “Clients—and indeed most of us—are more easily duped by these increasingly sophisticated attacks.” While AI has yet to cause significant destruction in deeper stages of cyber attacks, it has certainly sharpened initial compromises, making it imperative for companies to train employees to spot potential threats.

This has led to heightened awareness among firms about their vulnerabilities. “Our clients are recognising the need for robust cyber risk strategies,” Schappell observed. “It’s no longer about waiting for an incident to occur but actively preparing for emerging threats.”

She cited a January 2024 publication, “Risk & Resilience in a Time of Change: Singapore Snapshot Report”, that found that 20 percent of Singaporean firms are exploring options that include proactive risk and crisis management services—a positive shift from traditional, reactive approaches to insurance. Twenty-four percent feel unprepared to deal with technology disruption risks such as AI and other new technologies.

While technology is transforming risk assessment and management, access to reliable data remains a challenge. “Data is the gold,” Ng asserted. “We’ve invested significantly in building quality datasets to anticipate exposure trends better.”

He acknowledges a stark disparity in data quality across Asia. “In mature markets such as Singapore and Hong Kong, we’re seeing good, transparent data that fosters effective underwriting. But in countries such as China, Japan, and Korea, cultural and language barriers make it hard to obtain comprehensive data.”

The lack of uniformity in data accessibility is more than an inconvenience; it has real implications for insurers’ ability to assess risk accurately and offer suitable coverage. Schappell pointed out that regional regulations around data privacy and cybersecurity are slowly pushing firms toward better risk management practices, although there is still a long way to go.

Moving the needle

Amid these challenges, environmental, social, and corporate governance (ESG) considerations are coming to the fore, with governance and cybersecurity becoming integral to risk management discussions. “Cybersecurity is now a key component of the G in ESG,” Schappell explained.

“Large companies in Asia aiming for ESG compliance are increasingly required to have robust cyber risk frameworks, and insurance plays a crucial role in that.” The push for ESG-friendly practices is driving conversations around risk management, with companies keen to meet investor expectations.

The frequency of secondary perils, such as flooding, wildfires, and hailstorms, is another pressing concern for insurers. “These events may be smaller in scale but occur more frequently and are moving the needle in terms of risk,” Schappell noted.

Understanding these perils requires a nuanced approach that combines historic data with forward-looking insights, she suggested. “This is where an underwriter’s expertise can truly shine,” she said, “especially when considering factors outside the scope of traditional models.”

Looking ahead, Beazley is bullish on the growth potential of the Asia-Pacific market, particularly in cyber insurance. “The demand for cyber insurance is anticipated to reach $40 billion globally by 2030,” Schappell said, citing Beazley’s October Cyber Risk Update.

“That’s a global figure, but it highlights how much room there is for growth.”

The company has been investing in talent and resources to meet this rising demand, with a focus on both mature and emerging markets. “Over the last 12 months, cyber has attracted so much new capacity investment—from insurance but also from brokers and intermediaries who are willing to invest in cyber resources. We have a very bullish outlook on the cyber market,” Ng added.

“We’re very excited about all the growth opportunities in the cyber space, and in the largest mid-market space as well,” Schappell concluded.

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