Jeff Etherington, partners in Edwards Wildman's Insurance & Reinsurance Department in New York, discussed how shifting international regulations, coupled with increasing litigation post-Superstorm Sandy and the emerging risk of cyber breaches, is affecting the insurance industry in Reactions. In the article, "Insurers Drowning in Regulation
," Etherington said in regards to Solvency II, "Everyone recognizes and I think the European regulators recognize this too, that putting in a whole new regime for regulating capital can have a lot of unintended consequences, given that the European economy is not very healthy right now. It would be risky to change the rules."
Furthermore, in regards to cyber attacks, "I think the insurance industry itself has to come to grips with what the exposures depicted by this risk that they've signed on to really are. It is an exposure that the industry as a whole generally is not familiar with. There are some market leaders that have been writing these types of policies starting seven or eight years ago. Some of those leaders have now pulled out, with others taking a bigger chunk. Every time however that there is a breach, millions to tens of millions of dollars are at risk in responding to a breach, in insuring that there is appropriate monitoring going on, that there is appropriate remediation of the problem that led to the breach, and ultimately liability payments can arise from it."