The evolution of cyber risk and insurance has shown no signs of slowing, and one expert believes products will continue to evolve to include other aspects of risk.
Reid Sawyer, senior vice president of the credit, political, and security risk practice at
JLT, said that the next evolution of cyber insurance will see cover move further across business interruption.
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“Where I think the next frontier is going to be is surrounding the sophisticated aspects of business-interruption costs and extra expenses that firms are facing in a broader sense beyond that,” Sawyer told Insurance Business. “It is about how do we articulate or quantify that mean time to recovery for a business so it is up and operating faster. That is where the products need to evolve – around that aspect of capturing the business interruption and network interruption that occurs.”
Sawyer noted that, by its nature, insurance will always be “a bit behind the evolution of the risk” when it comes to the complex and ever-changing nature of cyber. However, Sawyer suggested that monitoring the risk landscape and helping clients identify their next risk is critical for brokers.
“When cyber coverage started 10 years ago, purely around data privacy, it has very much emerged into third party coverage, so it’s the blending of those areas and the identification of those types of issues that will drive insurance instruments forward,” he said.
Sawyer said that brokers must look forward in order to keep their clients updated on their changing risk needs.
“We don’t need to prepare for yesterday’s war, we need to be prepared for the next, and I think it’s the broker’s responsibility to help understand that,” he said.
A different perspective on the risk is also key, and Sawyer noted that brokers should not look at cyber from a linear perspective, but instead attempt to include stakeholders from different organisational divisions in conversations around cyber risk.
“I would suggest where brokers play a critical role is we elevate this as a risk function and start to think about this at an enterprise level,” he said. “[We should] empower the risk manager to be party to the conversation with their CSO, with their board and with the rest of the parties that are asking these hard questions. There must be a much broader conversation about the risk.”
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