Majority of companies underinsured against profit-threatening risks

According to the recently released HUB 2025 North American Outlook Report from Hub International Limited, more than 73 per cent of business leaders surveyed in the United States and Canada say their companies are underinsured against profit-threatening risks.

“Utilizing insurance, risk management and employee benefits strategies to improve profitability, vitality and resilience continue to be untapped methods for most respondents,” the company states in an announcement about the publication’s release. “Leveraging insurance to protect profitability, investing in data analytics to improve workplace vitality and building a comprehensive ERM (enterprise risk management) plan to be resilient against future risks are the solutions and strategies executives need to consider,” adds Marc Cohen, Hub’s president and CEO.

Insurance as a strategic imperative 

The whitepaper outlines a plan for addressing challenges in a discussion about inflation, climate change, natural disasters, cyber threats, artificial intelligence (AI) and geopolitical events. Among the key takeaways, they say companies should look at insurance as a strategic imperative, explore alternative risk transfer solutions (81 per cent reported inflationary and other economic pressures on their ability to secure adequate insurance coverage; the paper encourages a look at captive insurance and parametric insurance as two alternatives), invest in data insights for workplace vitality and implement ERM assessment processes. Currently, 62 per cent of the 900 respondents surveyed said their organizations had formal ERM assessment processes in place.

“A siloed approach to risk management leaves businesses vulnerable,” the report states.

Cyber risk 

In cyber risk matters, they also say the executives surveyed describe a staggering lack of preparedness.

“The projected global cost of deepfake fraud in 2024 is anticipated to reach $1-trillion, presenting a substantial threat to markets and the global economy. In last year’s HUB survey, respondents ranked their cyber risk as relatively low. In 2024, they identified it as a higher risk but one that they are adequately prepared to handle,” the report states. “However, the HUB survey indicates no discernable increase in cyber insurance coverage year over year with only 40 per cent of respondents reporting that they have some form of cyber coverage.” 

The report also notes key priorities executives have in 2025, with employee productivity leading the list – 69 per cent of executives say this is a going concern in the coming year. In Canada, this number rises to 75 per cent of respondents who say employee productivity will be a key focus area in 2025. “Recognizing the crucial link between employee well-being and overall business performance is driving organizations to increasingly turn to data and analytics to optimize their total rewards strategies, particularly compensation, and align them with productivity metrics.”