A more coherent, consistent recording of cyber incidents would help the insurance industry better understand the frequency and cost of cyber claims, according to a report published by the International Underwriting Association (IUA) in London.
To help raise awareness of liabilities, the IUA recommends the formation of “a registry system that collects and shares statistical information on the cost and frequency of cyber losses and claims across Europe,” said Matthew Hogg, underwriting manager of Strategic Assets for Liberty Specialty Markets and chairman of the IUA’s Cyber Underwriting Group, which compiled the report. (The IUA represents international and wholesale insurance and reinsurance companies operating in or through London.)
“Collating data on cyber incidents is often made difficult by differing terminologies and claims notifications are sometimes put on hold as long-term investigations into the causes take place,” he said in a statement.
“Ultimately, insurance companies do not hold all of the answers,” Hogg added. “The role of government, regulators and others will be critical in establishing useful data for underwriting purposes, as well as for risk management advice.”
The problem is that traditional classes of insurance business do not usually provide comprehensive cover for cyber incidents, and, consequently, policies contain gaps in cover that require extensions or the support of specific cyber products, noted the report.
“As the market for cyber insurance matures it will be important to review any gaps in coverage and uncertainties as new threats emerge,” Hogg continued.
The IUA’s Policy Positions Paper also strongly supports efforts by companies to address their cyber risk exposures at an operational risk management level and in the boardroom.
“Continuous professional development of insurance practitioners is also essential. We need an educated marketplace that has rigor in its approach to provide meaningful cover for all clients,” Hogg went on to say.
The Cyber Underwriting Group recommended continued analysis of existing cyber products and extensions to traditional policies in order to assure that they are meeting customers’ needs.
Source: International Underwriting Association
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