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It would not look good for Lloyds to leave the cyber insurance market. But with the frequency, complexity and severity of cyber attacks increasing at a significant rate in 2023. One asks how do you sustain a profitable 20% growth in Direct Written Premiums in 2024, without considering a wholesale change in how cyber insurance is underwritten?
‘Right of Bang’ is demonstrated not to work for pricing cyber insurance, and poor cyber maturity has left a significant coverage gap for many firms. One suspects loss ratios are being maintained through pricing, exclusion clauses and limits. The HBR report on risk factors (https://lnkd.in/eJ-NM5Mb) is a telling reminder of the challenges companies and insurers face with reporting significant risks, and those they will face with material risk oversight and assurance to the SEC cyber rule. The HBR report evaluated responses of S&P 500 companies use of cyber insurance
‘Over 8% of companies noted that losses not covered by insurance and/or increased premiums, deductibles, self-retentions, and/or co-insurance requirements might have a material adverse effect’
The UK Government reported in April 2023 that under four in ten businesses (37%) and a third of charities (33%) report being insured against cyber security risks – rising to 63% of medium businesses and 55% of large businesses (i.e. cyber insurance is more common in medium businesses than large ones). (https://lnkd.in/eu2CUhgH). Companies that are part of supply chains affected by cyber attacks and as we have seen recently, concentration risk presents major challenges across software supply chains.
Its time for the insurance industry to get to grips with ‘Left of Bang’ if it wants to create economically viable products.
Ted Dziekanowski Brian D. McCarthy
#cybersecurity #cyberriskmanagement #cyberinsurance
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