Standalone policies to lead cyber insurance market

Standalone policies to lead cyber insurance market | Corporate Risk & Insurance

Standalone policies to lead cyber insurance market
Eighty-seven percent of risk management professionals say cyber liability is a top business risk. In a year that saw ransomware attacks like Petya and WannaCry rack up a US$5bn bill, it’s easy to see why. Yet, only 24% said their companies have cyber insurance, according to a 2017 Ponemon Institute survey.

This could be the year that that changes. Until recently, companies have typically relied on their property and casualty insurance policies to provide risk transfer protection – albeit limited – from cyber incidents. Risk professionals have largely steered away from cyber insurance in the past because of inadequate levels of coverage.

But that’s expected to change as the damaging potential of cyber events become more understood – and feared, according to a new cyber security predictions report by Aon.

In response, more companies are likely to adopt standalone cyber insurance policies. “Insurance companies are looking at how they address cyber across their insurance portfolios,” said Christian Hoffman, Aon Risk Solutions national practice leader.

To meet demand, insurers are developing new, tailored policies. “The cyber insurance market is evolving to address unique risk,” Hoffman said. “Where in the past [companies] may have found cyber coverage in a dedicated cyber policy, or in a property policy, or maybe a casualty policy, companies are now looking for clarity and consistency across their portfolio – and the insurance market has evolved to address that.”

Now, cyber insurers are tailoring policies to address specific needs across industries, and even companies. “When you dial it down, we really have three key dynamics at play for cyber insurance: The event-driven impact from Petya and WannaCry, the development of dedicated cyber insurance solutions for emerging buyers … and the restrictions on clarifications as they relate to ‘silent cyber’ that fall within the insurance marketplace,” Hoffman said.

Sectors and regions that haven’t traditionally been involved in the cyber insurance market are also expected to pick up standalone policies. “Emerging buyers are now seeing the operational impact — manufacturing, transportation, energy utility, just to name a few,” Hoffman said. The global effect of cyber attacks will be reflected by what will likely be a rise in first-time buyers outside of the US, where cyber insurance is primarily purchased, in regions throughout Latin America and Europe.

Which should all lead you to ask yourself: Are you getting enough out of your cyber provider?


Related stories:
Severe punishments for violating new cyber compliance rules
Cyber insurance: is your provider really providing?