Nearly half of brokers ranked Russian cyber hacking as the biggest potential global threat to their clients, followed by the trade war between the United States and China and terrorism.

“At a time when technology and emerging risks are evolving at a rapid pace, the significant gaps in knowledge revealed in the survey pose a clear challenge to the industry. This wide-ranging research demonstrates that there is an opportunity for the industry to develop a new generation of talent to help businesses navigate uncertainty and evolving risks,” said Gary Grose, group head of producer management at Argo Group.

Respondents were asked in detail about their concerns on a wide range of issues affecting the insurance sector.

Brokers and SMEs agreed that cyberthreats are the emerging risk of greatest concern. One hundred percent of brokers said that cyberthreats are a medium- or high-priority emerging risk in the next 12 months, while 84 percent of SMEs reported the same.

However, assessments of risk diverged from there.

After cyberthreats, SMEs ranked the following as the top three medium- or high-priority emerging risks in the next year: virtual technologies (70 percent), the Internet of Things (64 percent), and climate change (58 percent).

Meanwhile, brokers offered the following rank: the Internet of Things (87 percent), drones (72 percent), and blockchain technology (64 percent).

Unsurprisingly, the only overlap in priority emerging risks for the next year involves the Internet of Things – devices vulnerable to cyberthreats.

The insurance industry faces a talent gap worsened by a perception that it is slow to innovate. Fifty-four percent of brokers said the biggest industry talent gap in the next five years will be with underwriters – which, given the increasing momentum of global and emerging risks, poses a unique challenge for the industry. Thirty-five percent of brokers attributed the talent shortage to a general slowness to innovate in the industry, while 32 percent cited an overall lack of knowledge about the insurance industry.

Brokers generally agreed there is no shortage of talent in sales, marketing, legal, and administrative roles.

Across the board, there was some reluctance among both brokers and SMEs to innovate with new technology – and cost was the biggest culprit. Forty-five percent of brokers and 41 percent of SMEs cited cost as the most significant barrier to innovation.

“Specialty insurance is in a unique position in that it deals with new ideas and new threats – and that means new opportunities and new challenges. Despite some hesitancy on the part of both brokers and SMEs, the clearest and most effective way for established insurers to ensure sustainable growth is to combine advanced technology with insurance expertise,” said Mr. Grose.

Despite some disagreement regarding what constitutes the single biggest global threat facing SMEs, there was general consensus among both brokers and SMEs that cyber hacking is a serious concern. Forty-nine percent of brokers ranked Russian cyber hacking as the biggest potential global threat to their clients, followed by the trade war between the U.S. and China (45 percent), terrorism (43 percent), the U.S. political climate (42 percent), worsening relations with Iran (26 percent), and escalating tensions with North Korea (22 percent).

In contrast, the U.S. political climate ranked the biggest threat among SMEs (40 percent), followed by Russian cyber hacking (34 percent).

Other key takeaways included:

Almost half of brokers (47 percent) and SMEs (67 percent) were cognizant of the long-term risks of climate change.

Even though cyber risk is on the rise, SMEs seemed overconfident and underprepared – 61 percent felt prepared, and 43 percent had no plans to buy cyber insurance.

There was a widespread belief among SMEs (78 percent) that automation and artificial intelligence would expose them to new liabilities.