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The recent Lloyds of London cyber mandates create opportunities and challenges for the insurance industry.
Foremost I suspect that they were written to reduce the impact of aggregated losses within the reinsurance market, ahead of the underwriting direct polices. As pointed out in the article the challenge is cyber attacks come from many different national and international sources, including nation states, proxies, cyber criminals and script kiddies. They morph into one another and it can be very difficult to extract out the nation state from the cyber criminal. Who is to make the judgement if a hack comes from a nation state, a proxy or a criminal gang being supported by a nation state. As we know that hackers work for governments, proxies and themselves, using the same code across multiple jurisdictions.
Cyber is not a traditional risk, it cannot be efficiently underwritten by traditional thinking. This video from March 2022 of Chris Inglis the US National Cyber Director explains why cyber is a different risk, by orders of magnitude of other risks. https://lnkd.in/e5WivnNf
The insurance industry is in a position to support its clients manage cyber risk, a risk that most businesses cannot manage and a risk that regulators are intent on addressing. Requiring cybersecurity risk management, cyber security programs, governance and reporting.
The insurance industry should focus on the existing and proposed regulatory programs as a mechanism to support their clients. Developing appropriate risk mitigation strategies that support the management and transfer of risk that includes insurance?
Ted Dziekanowski
#cyberinsurance #cyberriskmanagement #cyberregulation #cyberlaw #theaugustagroup
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