Insurers must knuckle down on assessing their silent cyber exposures this year, as cyber events continue to
grow in severity and impact – and clients look to recoup losses wherever they can, warns cybersecurity firm Stroz Friedberg.
“Silent cyber exposure absolutely has to be at the forefront of carriers’ minds,” Shannan Fort, cyber expert at
Aon Risk Solutions, told Insurance Business.
While many insurers have been working towards assessing their exposure – with some making specific hires to do so – the high-profile cyber events that hit a number of companies in 2017 mean it’s now becoming an imperative to do so, and there are now tangible examples of what could happen.
“This past year has really helped solidify the fact that the silent exposure is there. When a company has a large incident, they are absolutely going to avail themselves of as much of the coverage as possible, because they are suffering very large incidents,” Fort said.
The cyber expert described Lloyd’s as being “ahead of the game” when it comes to understanding where cyber exposure fits within the syndicates and cover it writes. But in 2018, the stakes will be raised for everyone.
“Carriers need to be a lot more prudent about where that cover can come into play… This is an issue that’s existed for a while, carriers know that this issue exists, and so it’s going to be a bit harder for them to deny claims where there’s ambiguous cover because they weren’t taking into account that it could potentially fall under that policy,” Fort explained.
The message for the industry is to think broader as the cyber landscape becomes increasingly sophisticated, and as cyber events can manifest in a myriad of ways.
“This risk exists, and these breaches and the associated losses can show themselves in a million different ways,” Fort warned. “Insurers have got to be prepared to not only cover that risk, but to understand where that risk exists. That’s not necessarily the easiest thing in the world.”
She added: “The carriers that are focusing on putting things in place, that are going through their policy forms to understand where that risk exists, are likely going to be the ones who are more prepared for that loss when it comes.”
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