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Industry and not just the cyber insurance industry is between a rock and hard place with cyber. Ted Dziekanowski and I wrote a year ago about the challenges cyber insurers, cyber insurance and the insured face (https://lnkd.in/dGFVVjCi).
While you can underwrite anything, the past 12 months demonstrate you cannot economically underwrite cyber insurance. Insurers have to recognise that industry has in the main used cyber insurance as the only cyber risk transfer tool. At a time when insurers and many of the insured do not understand cyber risk; what is required to implement cybersecurity; and what their clients should do to mitigate cyber risks.
As this article demonstrates, lenders are increasingly concerned about the cyber exclusion clauses being adopted by Lloyds. As Lenders realize that their loan capital and collateral rapidly disappears when companies are hacked. This should not be their only concern, cyber affects credit ratings, share price, loan capital and lets hope packaged and securitised auto debt is not affected. Should an attack ‘brick’ connected autos, the costs could hit insurers, lenders and OEMs and as the post from Janet Yellen alludes, current geopolitical tensions are not FUD.
With 20 years of cybersecurity and risk experience with tier 1 banks, I can say that the cyber insurance industry is not a fast maturing area of insurance (can anyone define what they mean by fast maturing for a risk that continually evolves – my statement is an oxymoron I know). One only has to look at the challenges companies face with managing on-prem, cloud or hybrid data, or the steps governments are taking to regulate cyber to recognise that cyber insurance is not fast maturing. However regulation is fast maturing, setting standards of cyber compliance and shifting cyber ‘Left of Bang’ to corporate financial statements.
We have said that insurers should be thinking outside the box to resolve this problem. A problem that may not be of their making, but one that needs insurers to work with industry to provide an answer to. A problem that the banks and regulators are looking for an answer to.
Stephen Pitt-Walker, JD, FGIA Rachel V. Rose, JD, MBA
#cyberinsurance #cybersecurity #cyberlaw
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