Webinar: Cyber Insurance in 2022

This webinar on what to expect from the world of Cyber Insurance in 2022, was the first of many and is part of our continuing education program here at the Cyber Insurance Academy. Our webinars are normally only open to our graduates only, but this one was open to the general public on this one-off occasion.
Webinar Masterclass

Looking to the Future: What to Expect From The Cyber Insurance Market in 2022

Our expert panel included: 

  • Shannan Fort, partner at McGill and Partners. She began her career as a broker but quickly rose through the ranks to become one of London’s leading cyber insurance innovators.
  • Ben Hobby, Partner at Baker Tilly. Ben is a highly esteemed claims specialist boasting over a decade of experience with complex, big-ticket cyber claims.
  • Philippa Berry, senior underwriter at CFC underwriting. Philippa has been recognized as one of the cyber market’s leading underwriters, winning several awards for her underwriting and expertise.

Some of the topics discussed included:

The impact of systemic risk on today’s hard market

  • This has been a key driver of today’s market conditions.
  • Aggregation has been of particular concern. Given that most insureds in a portfolio will be using at least one of the major technology providers, insurance professionals are increasingly having to look at the potential impact of a third-party outage on their clients.  
  • Given the cost implications of BI, systemic risk has upped policy pricing. CAT models are exacerbating this issue: insurers who are concerned with the potentially catastrophic losses caused by systemic risk are bolstering their cash reserves and shrinking their risk appetite. 

Ransomware has also been a key driver of the hard market

  • Data suggests both severity and frequency have increased, but the increase in severity is more pronounced and severe.
  • The financial fallout of a ransomware attack has expanded enormously and this has prompted significant increases across the tower, with primary markets struggling in particular. More layers throughout the program are now implicated in the loss – the “burn layer” has increased dramatically. For this reason, they are having to tag on additional costs. 
  • There is a significant component of loss that is not tied solely to the ransom demand – BI is also of major concern. The reality is that the market still lacks the capacity to appropriately address the risk faced by insureds.  
  • The stringent approach to underwriting ransomware has changed. Underwriters are now focusing more specifically on backups and their encryption. Reliance on external scanning for third-party risk is also increasing. 

A lack of education is stifling the cyber policy product’s maturity

  • A general lack of experience and resources in the market has made designing accurate CAT models challenging. This has had a negative impact on risk appetites, against which underwriters are drafting policies.
  • Brokers are also having to educate their clients on effective cyber hygiene as the standards and underwriting requirements continue to evolve in the face of increasing losses. Policyholders need a better understanding of the risks they are facing and the consequential BI of an event – only then can ransomware be underwritten and priced properly. 
  • However, there also needs to be a greater understanding across the board of how risk should be managed in every industry and every segment of revenue. There is a lack of willingness to produce bespoke cover for clients that incisively addresses their needs and risks, but, these bespoke policies will encourage long-term sustainability in the market. 

Read more about the Cyber Insurance Academy’s courses here.

What can we expect in 2022

  • We will see some significant changes in regulation and we have already seen examples of cross-jurisdictional cooperation to target cybercriminal gangs. 
  • We may see government policies issued to prevent insurers from paying ransomware fines. This will in turn encourage policyholders to ensure they are adequately defending their own networks. 
  • There may also be a greater focus on anti-money laundering legislation and a tightening around cryptocurrency law. 

Missed out? We have got you covered with a recording of the webinar. 

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