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The cyber insurance market is going through a period of change, premiums up, coverage down and exclusion clauses being added. Cyber attack frequency complexity and severity is rising at an alarming rate and one suspects we are only at the start of the period in which cyber creates real world challenges, as OT and IT attacks converge. We haven’t yet seen the fall out of exclusion clauses as organisations realize that they cannot transfer cyber risk solely to the insurers. Insurers realize they cannot economically insure the risk (Zurich CEO) without a different approach. The implementation of cyber risk management has not reached a critical mass.
These are a few reasons why ILS products for Cyber should be carefully considered for the time being. The cyber market is immature, the cyber insurance market is correcting itself and cyber regulation has not yet taken effect, that will take several years to implement. Going into ILS for me has analogies to the CDS/CDO market of the mid 2000’s. But the only complicating factor then was mortgages and loans. The complexity of cyber makes it a risk that is very hard and expensive to manage, one only has to look at a typical cyber standard to understand how hard.
Ted Dziekanowski
#cyberinsurance #cyberriskmanagement #cyberinsurance
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