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This an important read and development for cyber insurance and re-insurance. Munch Re one of the worlds largest cyber reinsurers has long discussed its role in cyber insurance, being prepared in 2023 to ‘Give up the cyber business over accumulation concerns’ (https://lnkd.in/eRT3GmE8). Making clear that ‘uninsurable risks, such as attacks on critical infrastructure and cyber warfare, will continue to be explicitly excluded from the coverage Munich Re provides.'(https://lnkd.in/ey7diUPX).
So if correct, it should come as no surprise that Munich Re has taken the step to clarify cyber war exclusion clauses in reinsurance contracts from January 1st 2024. While little is known about the wording, it may not bode well for cyber insurers or their clients over the long term. As the reinsurance market comes to terms with the effect that cyber attacks have on Critical National Infrastructure; the consequential losses attributable to cyber attacks and the lack of cyber maturity of the insured.
The cyber insurance and reinsurance market needs capital to support future growth. Cyber War Exclusions help reduce the exposure on reinsurers if or as is more likely when a catastrophic cyber attack occurs, if attributed directly or indirectly from a war, or carried out as part of war, or is collateral damage.
There are few options currently available for the insured to manage cyber risk, the traditional being to use cyber insurance as the majority risk transfer tool. This will change as cyber regulation forces covered companies to address cyber risk management, and balance risk between financial statements and insurance.
However, there comes a point where all the low hanging fruit is dealt with and the difficult questions need to be asked. ‘How are you going to manage cyber risk’?
Ted Dziekanowski Brian D. McCarthy
Veritas GRC
#cybersecurity #cyberriskmanagement #cyberinsurance #cyberreinsurance
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