‘Silent’ virus coverage must be tackled as priority: Gallagher Re whitepaper

Tackling ‘silent’ cyber risk and non-affirmative exposure from both ransomware attacks and the COVID-19 pandemic must be a priority for the re/insurance industry, according to a new white paper from Gallagher Re.

The specialist broker noted that while reinsurers are increasingly excluding cyber in other lines to address their 'silent cyber', the pandemic is likely to be a catalyst for further escalating the transition to a property, casualty & cyber market.

The industry should also view the challenge of holistically dealing with virus risk as an opportunity as much as a threat, it said.

“Non-affirmative exposure in general is a vulnerability that itself needs to be patched,” said Jennifer Braney, consultancy lead & cyber broker at Gallagher Re. “[...] But the market should also see the challenge of dealing with virus risk in its totality as an opportunity as much as a threat.

"In doing so, these efforts may ultimately lead to not only more effective risk transfer through increased insurance penetration, clarity of coverage and more effective products, but ideally a more manageable risk with a lower economic loss as the vulnerabilities that are exploited by viruses are addressed.”

Ian Newman, global head of cyber at Gallagher Re, added: “This year, ransomware and COVID-19 combined to provide, in many cases, a one-two punch to businesses as well as the public sector. Our paper presents a comparison of these two phenomenon that, in their own ways, have defined the year 2020 and demonstrates that, in the face of uncertainty, there remain at least opportunities to learn and overcome.

“There are valuable lessons to be learnt in questioning and engaging with what is unknown to us and outside our ‘normal’ practice areas. Indeed, these two virus events – one man-made and one nature’s design – clearly demand proaction and present an opportunity for the (re)insurance market to do what it can do best.”