CyberinsuranceUnderwriters of cyberinsurance policies need better understanding of cyber risks
Demand for insurance that covers an ever-increasing range of cyberattacks is growing and evolving rapidly, and a number of insurance companies are seeking advice through sponsored events that can gradually educate their work forces. At Standard & Poor’s Rating Services 2015 Insurance Conference last week, a panel of insurance experts stressed the importance of insurance underwriters gaining a better understanding of cyber risks in order to make better property and risk assessments.
At Standard & Poor’s Rating Services 2015 Insurance Conference last week, a panel of insurance experts stressed the importance of insurance underwriters gaining a better understanding of cyber risks in order to make better property and risk assessments.
As Insurance Journal reports, demand for insurance that covers an ever-increasing range of cyberattacks is growing and evolving rapidly, and a number of insurance companies are seeking advice through sponsored events that can gradually educate their work forces.
“We’re much farther along than we were two years ago; we have much better information now,” said Kevin Kalinich, a panelist at the event. “But it’s not a static model. It changes over time, and in two years it will be much better.”
Currently, a handful of companies offer insurance for cyber markets, including American International Group, ACE, Chubb Corp., Zurich Insurance, and Beazley Group, but panelists reported that many clients are seeking even more extensive coverage than is currently offered.
According to Kalinich, research and education make for the best developments within the industry.
“As the market develops, providers will need some time to model risk sufficiently and to set premiums accordingly. This will remain difficult because the threat is evolving fast. Two decades of reliable data are needed to feed models,” he added.
To help in that effort, the National Association of Insurance Commissioners (NAIC) has adopted a new set of guiding principles for companies underwriting cyber risk.
“The primary issue — the cornerstone of the whole effort — is making sure we are seamless in information sharing,” said Adam Hamm, the North Dakota commissioner and chair of the NAIC Cyber Taskforce. “The good news here is that that is happening. There’s a substantial amount of work being done to ensure that we’re working together and collaborating.”
Additionally, the panel urged that policyholders be better made aware of how cyber insurance will fit with other lines of coverage — the difference between a property or casualty policy, for instance.
“If there’s a cyber attack that causes tangible damage to property, it could be covered under your property policy,” said Kalinich. “If there’s an attack that causes tangible damage to a third party, your general liability policy could cover it.”
With the increases in the connection of real, physical objects, including the power grids, to the Internet, the increased danger of harming actual lives and infrastructure is leading to a new world in insurance coverage, with the Standard & Poor’s conference being just one of the many efforts to become better prepared for an uncertain future.
“It’s going to get worse before it gets better,” summarized Jason Healey, the director of the Cyber Statecraft Initiative for the Atlantic Council. “Without a doubt.”
