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Cyber insurance underwriting has always been an art and one expects it will remain so for some time to come. As cyber insurers get to grips with the fact that Right of Bang data does not correlate with an organizations ability to mitigate risk, and cyber insurance is now a secondary risk treatment factor behind cyber regulation. One that along with D&O insurance may no longer be effective for boards to mitigate cyber risk, and the consequences of regulatory enforcement. But as the article points out Cat models are converging as more data becomes available. That one expects will converge further as cyber regulation comes online, requiring covered organizations to have more clarity over their cyber risk management processes and associated data.
One has said for some time that the biggest challenge for the cyber insurance industry is to resolve the 99% problem. That is 99% of all organisation are SMBs/ SMEs, that don’t have the money to manage cyber risks. This looks to correlate with the enclosed report that may demonstrate that an organizations revenue is one function associated with cyber loss. That should not be a surprise, as increased revenue often correlates to increased cyber spend.
One expects that cyber regulation will be the biggest factor in cyber loss reduction over the coming years. As covered organisation are compelled to demonstrate their cybersecurity risk management, at the expense of market access and enforcement actions. Regulation that will provide insurers with the ‘Left of Bang’ data we have repeatedly said is required by insurers to underwrite cyber risk effectively.
Ted Dziekanowski Rachel V. Rose, JD, MBA Bob Dix
#cybersecurity #cyberriskmanagement #cyberregulation #cyberinsurance
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