Insurance Telematics

AI boosts demand for cyber risk cover, captive insurance: Ocorian

Ocorian believes that growing use of artificial intelligence (AI) in talent risk management is increasing the need for cyber risk cover and underlining the role of captive insurance. Increased use of AI in businesses has the downside of increasing exposure to cyber risks. Global net cyber insurance premiums, which were approximately $12 billion last year, are expected to triple within the next five years.

According to Ocorian, talent risk management is becoming a bigger issue for companies as increased turnover of employees is leading to skills gaps across many industries. This is driving firms to embrace innovative strategies such as AI to identify workforce trends. It is also prompting them to take preventative action.

Ocorian says captive insurance and the insurance industry in general can play a key role in providing cyber liability insurance. They can also support talent risk management strategies. Wholly owned subsidiaries establish captive insurance companies with a license to write insurance policies for their parent entity and related entities. They can provide cyber insurance at affordable prices.

Captive insurance in general provides more control and flexibility over the risks covered to companies while producing operating cost savings. There are fewer premium payments made. Investors can invest capital to generate investment income instead of using it for premiums. Rates are lower in reinsurance markets. Companies can also use key person insurance to support talent risk mitigation. It can extend the cover to a broader range of employees rather than just directors and founders.

Sherman Taylor, Head of Capital Markets – Bermuda at Ocorian said: AI algorithms can identify workforce trends by analyzing valuable internal and external data on employee performance and behavior traits. This process also includes examining career ambitions, enabling the organization to take preventative action. Ultimately, it helps the organization manage its talent more effectively.

“But it has the downside of increasing exposure to cyber risks. Even organizations cannot guarantee the success of the best talent management strategies. Organisations may find it useful to finance their less controllable talent risks through one or more insurance options.” 

Ocorian also underlines the role of employee share ownership plans as a way to support talent risk mitigation. They enable employees to have an ownership stake in their company.

Ocorian can help with end-to-end advice on how to set up a captive and develop an appropriate insurance program and optimise the day-to-day functioning and governance of the captive in line with regulations and best practices.

Its corporate services team specialises in setting up and supporting a variety of employee incentive plans to reduce the administrative burden on companies. For more information contact the Ocorian team to find out more.

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