The rapid growth of cyber threats has created challenges for the insurance industry in developing underwriting talent, acquiring claims data, establishing modelling techniques and securing reinsurance capacity. A new report by the International Underwriting Association’s Cyber Underwriting Group highlights the need for national authorities to help address some of these issues and raise awareness of liabilities.
The document states that traditional classes of insurance business do not usually provide comprehensive cover for cyber incidents. Policies contain gaps in cover that require extensions or the support of specific cyber products.
There is a wide and competitive range of cyber insurance products available in the London Market. However, more work needs to be done on collecting data about the frequency and cost of cyber claims. The IUA’s Cyber Policy Positions paper calls for a more coherent and consistent recording of cyber incidents.
Matthew Hogg, Underwriting Manager of Strategic Assets for Liberty Specialty Markets and Chairman of the IUA’s Cyber Underwriting Group, said: “Collating data on cyber incidents is often made difficult by differing terminologies and claims notifications are sometimes put on hold as long-term investigations into the causes take place. The IUA’s Cyber Underwriting Group would welcome the establishment of a registry system that collects and shares statistical information on the cost and frequency of cyber losses and claims across Europe.
Ultimately, insurance companies do not hold all of the answers. The role of government, regulators and others will be critical in establishing useful data for underwriting purposes, as well as for risk management advice.”
The Policy Positions Paper also strongly supports efforts to companies at operational risk management level and in the boardroom about their cyber risk exposures. As part of this wider education process, the Cyber Underwriting Group recommends continued analysis of existing cyber products and extensions to traditional policies.
Mr Hogg added: “As the market for cyber insurance matures it will be important to review any gaps in coverage and uncertainties as new threats emerge.
“Continuous professional development of insurance practitioners is also essential. We need an educated marketplace that has rigour in its approach to provide meaningful cover for all clients.”
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