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There are likely no models the UK Government or cyber insurers can write that will evaluate the real cost to the UK industry in the event of a cyber attack, that are not by any measure extreme in demonstrating the lack of re-insurance capital needed to manage the growth in cyber policies, possible losses to the UK industry, and regulatory capital.
As noted by the CEO of the FCA this week, who highlighted the effects of the JLR hack on UK GDP, ‘globally a fraction of catastrophe and cyber risks are insured. The rest migrate to company P&Ls, credit ratings, risk premia, prices, and ultimately to households.’
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We have said the same many times that cyber risk transfer through cyber insurance is not an answer to cybersecurity risk management. It’s a right-of-bang solution used by boards to fixing a left-of-bang problem. As demonstrated by the JLR hack, the effect of the cyber attack and consequential losses to the UK economy are greater than any product or program the Insurance industry could sustainably create.
Having an insurer of last resort, such as the Government, is not a viable solution. As demonstrated by this week’s AWS outage, the hack on United Health, the failure of CrowdStrike in 2024, and the JLR hack. Highlighting the possible effect of catastrophic events on insurers and governments. The pockets aren’t deep enough to cover the losses to society.
How will the insurance industry write policies to close the underinsurance gap without supporting industry management of left-of-bang cyber risk? Every policy should come with board education, with an ability to demonstrate cybersecurity risk management, attestation, and affirmation of risk.
@Thaddeus Dziekanowski Brian D. McCarthy Faisal Khan
Veritas GRC
#cybersecurity #cyberinsurance
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