Insurance broking and risk management firm Marsh recently published its 2018 terrorism risk insurance report, looking at how the market should respond to the needs of an evolving risk landscape. The threat of cyberattacks is pinpointed as a key evolving vector, and one that has impacted Kiwi businesses significantly.
According to chief client officer Steve Walsh, cyberattacks have been a top concern for a vast number of businesses over the past year.
"It’s an area that has gotten significant attention from directors and businesses,” Walsh told Insurance Business. “A recent directors’ survey of over 500 directors here in New Zealand showed that a cyberattack was by far the largest and most significant risk on their minds.
“There’s some underestimation of what the risk actually is, and that’s usually due to lack of understanding,” Walsh said. “If you don’t know how big the risk is, how do you get confidence that the insurance that you buy is actually going to protect you? It’s complicated to buy insurance for something you can’t properly assess but that you know has the potential to be significant.”
Walsh said that New Zealand is almost certainly in the lower quartile of countries whose businesses buy cyber insurance, and that the country is well away from global percentages. Global assessments report that some losses could be in the trillions of dollars, yet people are struggling to match the risk to the insurance proposition.
“The claims we’ve seen put in are mostly in the SME space. There have been quite a few for data recovery, and several claims for ransom,” Walsh said. “It’s definitely a growing concern both for businesses and insurers, because we’re all trying to assess our own exposure too. My advice to brokers and insurers would be to put all your efforts into understanding the risks to the business, and to understand where the trends in cyber exposure are going. At the moment there’s a lot of concern around personal data, and that’s an area where you need to be aware of the global legislation.”
According to Marsh & McLennan’s Global Risks Report, the cyber and digital disruption spaces are what’s now being called ‘the fourth industrial revolution’, and businesses should be paying close attention.
“Lots of people in New Zealand think these things don’t impact us because we’re only a small market,” Walsh said. “People do need to understand how interconnected all these risks actually are.”
