Ted Dziekanowski This article is well worth reading, it supports our arguments that insurers need to rethink their approach to cyber insurance, and

← Back to Blog

Ted Dziekanowski This article is well worth reading, it supports our arguments that insurers need to rethink their approach to cyber insurance, and the cyber insurance industry faces challenges that one is not convinced it has yet found solutions to.

The article cuts through cyber insurance. Discussing the challenges of war exclusions on the insured and why the insurance industry needs to include cyber exclusions. It balances the un-realistic expectations of the insured (who have fallen back on cyber insurance as a risk transfer tool), with the lack of cyber insurance industry knowledge, experience and data to underwrite cyber risk. Challenges that have got the cyber insurance industry into a difficult place, with few roads out.

“As much as we want to be there for our customers, the reason for the exclusions is primarily twofold,” she said. “First, it’s impossible for us to price for the risk of damages sustained by war. And second, war by its nature is so destructive. Providing coverage for war would likely drive the insurance market into bankruptcy.” [sic]

The article reaffirms that cyber is a risk that co-exists with other insurance policies and current risk evaluation has not enabled insurance brokers or underwriters to price policies with enough accuracy to make cyber insurance an economically viable product. A risk that the insured will be required to manage as cyber regulation develops in the EU and U.S and reduces the pressure on insurers.

We wrote in January 2022 that cyber insurance was a risk that required a different approach by insurers (https://lnkd.in/dGFVVjCi). An approach that would benefit both the insured and insurer.

It begs the question if it is prudent for governments to identify themselves as insurers of last resort for catastrophic incidents (Although it would be beneficial for the cyber insurance industry).

#cyber #cybersecurity #cyberinsurance #insurance #risk #theaugustagroup #cyberriskmanagement

View Original Post
https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A7011614918055452672