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I’ve been fortunate to have been able to build a considerable amount of diversity into my career. Diversity including engineering, manufacturing, academic research, insurance and banking, with a common thread of risk and cybersecurity. I threw in a little experience leading cyber to a level high enough level to influence corporate strategy and governance of blue chips across the 1st and 2nd line. So when I read the enclosed in the UK and U.S, I play attention.
In the past 6 months we have the CEO of Zurich say that cyber in an uninsurable risk, other insurers said the same at Davos. Lloyds of London released cyber exclusion clauses, the CEO of MacTavish reaffirmed the lack of coordination across the cyber insurance industry, ‘How in hell do you decide it is a state-sponsored cyber attack?’. Insurance policy coverage has fallen, premiums raised and cyber attacks changed up a gear or two. We have seen the U.S National Cyber Director reaffirm that market forces have failed to manage cyber and the EU and US move to release cyber regulation, to hold boards accountable for cyber, with more to follow.
The cyber insurance industry does not have the capital to manage the risk (Solvency II). Going to governments to pool capital or as the ‘Insurer of last resort’ won’t dent the problem; cyber regulation is transferring cyber risk back to the insured. Terrorist attacks were predictable (the UK government knew most of the terrorists), targeted and low cost events. Cyber is something completely different, there’s little predictability, cybersecurity and does the UK Government have enough cash, given its debt burden to underwrite the risk?
Rather than focusing on the outcome of the problem, the insurance industry needs to focus ‘Left of Bang’, that is being driven by cyber regulation. Regulation that transfers cyber risk back to the insured and provides the perfect solution and opportunity for insurers. +95% of our organisations are SME’s and insurers need more radical solutions to managing cyber, supporting the insured manage the risk ‘Left of Bang’. That will help them manage the claims process ‘Right of Bang’.
Ted Dziekanowski
#cyberinsurance #cybersecurity #cyberriskmanagement #theaugustagroup
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