Shifting the exposure: why COVID-19 may help tackle silent cyber

The issue of ‘silent’ cyber requires a far wider risk dialogue, particularly when the lack of standardisation that still exists in most types of policies is considered. However, given that the world has in some ways become a smaller place thanks to the virtual reality we all entered during the pandemic, there might be an opportunity for the market to come together and tackle the ambiguity and uncertainty that still exists.

That was one of the main points from a panel discussion titled “ Insurers grapple with a new (and rapidly changing) landscape” held on Intelligent Insurer’s Re/insurance Lounge, an online platform where interviews and panel discussions are available on demand.

The event featured Kassie Bryan, head P&C Solutions Americas, Swiss Re; Seth Rachlin, global insurance industry leader, Capgemini; and Scott Bailey, divisional managing director of cyber, Markel International.

“We want to avoid a scenario where there is a major event that is unanticipated,” said Bryan. “One way to avoid this is to invest further in data-sharing involving cyber risk.

“The economy is digital and cyber risk is continuing to grow. It is in everyone’s best interest that we strengthen our understanding of silent cyber risk and that we put measures in place to make it more sustainable in the long term,” she added.

Education needed
Bryan added that the rapid move to embrace digital technology in the past year could create opportunities for the market to come together.

“The industry needs common language and shared databases at a global level. Some industry leaders are investing heavily and engaging in wider risk dialogues to find ways of resolving the challenges of silent cyber,” she said.

“This includes a combination of a greater investment in data-sharing and creating a common language.”

Rachlin said there is still a lack of awareness that needs to be addressed.

“The knowledge base is not there, and many clients are unaware of the risks,” he said. “There is an educational responsibility for brokers and agents, and ultimately carriers, who are struggling with how to educate clients.”

He added that the industry needs to be more scientific in its approach to providing better education so that people are able to offer better levels of coverage to clients, while protecting the industry at the same time.

“We are seeing a push towards stand-alone coverage from a wave of new companies as well,” he said.

Despite moves to eliminate silent cyber exposure through exclusions or clarificatory policy language, many see silent cyber as an issue that has been exacerbated by COVID-19, according to the 2020 Cyber Risk Outlook survey by Willis Re.

Some are introducing new policy language and underwriting guidelines. Others, such as Lloyd’s, are requiring insurers either to expressly exclude or to include cyber risk in their traditional lines policy wordings.

Bailey said that cyber brings a concentration of risk.

“There is a world of work we still need to do, but technology is moving at such a rapid rate that we are in a difficult position to standardise policies as rapidly as possible,” he said.

“Lack of standardisation is a barrier in the market and the exposures regularly shift.

“But a lot of insurers are tightening policy language to reduce the risk of silent cyber coverage, and the way risk is written is improving in leaps and bounds.”

To view the full Re/insurance Lounge session click here.