Major global companies are growing increasingly concerned over the potential of business interruption (BI) losses as a result of cyberattacks, according to specialist
Beazley.
This week, a report from the insurer and
Munich Re noted surging demand for “holistic cyber cover” that addresses BI and supply chain risks. The two companies paired up in 2015 to launch Vector, a service that it says offers ‘bespoke expertise and deep capacity for the world’s largest and most complex cyber risks.’
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Beazley’s technology, media and business services UK focus group leader, Paul Bantick, told Insurance Business that recent wide-scale cyberattacks have helped push the issue to the top of the corporate agenda.
“We have seen a lot more high-profile cyber events in the last 12 months,” he said, pointing to global attacks such as Petya, NotPetya and WannaCry, which received significant media coverage.
“I think that has led to a growing concern about the cyber threat amongst large organisations, and it really has become a boardroom-level, CEO, CFO issue,” Bantick explained.
The demand for more holistic programs began to emerge around 18 months ago, he said, and since its launch, Vector has seen an “uptick each month in demand and binding.”
Until recently, the cyber insurance conversation was dominated by data breaches and the arising third party liabilities, which was mostly seen as a threat to sectors that hold large volumes of customer data. But in today’s world, cyber risks are emerging fast, and companies are beginning to take note, according to Bantick.
“What you’re seeing now is a lot of the manufacturers, industrial companies, and infrastructure providers, as well as the big banks, saying – actually, these things can go wrong, and they can result not just in data breaches but in material downtime, material business interruption, and potentially property damage. These are huge risks to an organisation, and businesses now understand that they need to protect themselves against them,” he said.
Demand for BI cover is now one of the main drivers in the market, and can help organisations recover losses incurred as a result of interruption to their own business or to a third-party contractor.
“If a third-party that you’re dependant on goes down or has a breach, then you’re going to suffer a BI loss as a result,” Bantick said, adding that many businesses are reliant on technology providers in particular, such as cloud systems or IT outsourcing firms.
With GDPR approaching too, firms operating in the EU are going to see the stakes raised even higher: “It’s going to make having a data breach a lot more costly, a lot more complex, a PR nightmare, and a lot more difficult to deal with,” Bantick noted. “There’s going to be a high stress environment, and people are going to be looking for services and support from their insurers.”
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