Austria’s insurance industry is already making intensive preparations for the risks to their business that a potential “blackout” might have. This is a finding of the “Blackout Maturity Level Assessment” developed by the Austrian Financial Market Authority (FMA), which is being applied to the insurance sector for the first time in 2023. As was the case of the first assessment, which was conducted in 2022 for Austria’s Pensionskassen (pension companies), the survey and analysis conducted among insurance undertakings focussed of three areas: “preparedness”, “management and reaction”, and “restart and resumption”. In addition measures for ensuring the orderly pursuit of business were evaluated and surveyed regarding the extent to which insurance products cover claims from a blackout.
“In the complex globally networked digital world, a power outage can paralyse households and companies for a longer period of time. This is especially the case also for financial markets, their infrastructure and all their participants,” remarked the FMA’s Executive Directors, Helmut Ettl and Eduard Müller: “It is therefore important that anyone who is active in and for these markets, makes structured and timely preparations for managing the inherent risks. The FMA’s ‘Blackout Maturity Level Assessment’ risk assessment tool, which was developed in-house provides valuable assistance, exposes vulnerabilities and measures progress.”
Detailed analysis of the necessary measures and those taken
The analysis uses a three point scale for the blackout assessment, with 3 reflecting the highest level of maturity. Austria’s insurance industry is already in a good position: with scores of 2.5 for “preparedness”, 2.6 for “management and reaction” and 2.3 for “restart and resumption” respectively. Almost one-half (48%) of the surveyed companies meet all of the standards for the highest level of requirements in the overall assessment of all criteria, while in contrast, some six per cent are at the other end of the spectrum. The category “preparedness” contains measures such as establishing an ‘ICT Business Continuity Policy’, impact and risk analyses, contingency plans, an emergency task force and conducting test runs. The category “management and reaction” contains measures like clearly defined criteria and mechanisms for triggering the contingency plans, communications strategies in crisis conditions, securing the company premises or an emergency power supply. “Restart and resumption” contains preparations for emergency operation until a return to stable operations as well as plans and measures about the specific restart process.
The area with the greatest room for improvement for insurance undertakings, with a score of 1.9 is the new category “Ensuring orderly business” (business conduct) in the event of a blackout. This includes criteria like information to insurance policyholders in the run-up to a blackout, measures in the event of a premium being delayed as a result of a blackout, a delayed damage claim report, provision of services in the event of a blackout and the catching up of or prioritisation of services directly after a blackout.
Very few offers for insuring of blackout risks
The special survey conducted about insurance cover for damage arising from blackouts revealed that around half of contents and household insurance policies already cover certain types of damage from blackouts – in particular the insurance of frozen food, although the coverage levels are relatively low. Specialised insurance products, which cover of specific damage or assistance services (such as interruption of business, legal protection, …) that arise from a blackout, have currently not been launched on the market, and according to information from the insurance industry there is currently no plan to do so. Coverage of risks from blackouts therefore require the conclusion of individual agreements with insurance undertakings. The full “FMA Report on the State of the Austrian Insurance Industry 2023” can be found on the FMA website in German via the following link: https://www.fma.gv.at/en/insurance/disclosure/state-of-the-austrian-insurance-industry/
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)676 88 249 516