Cyber risk has spurred significant chatter between communication, technology and media professionals (CTM) and their CIOs, COOs, and CEOs, as boards become more interested in the topic, according to a recent survey from JLT Specialty.
The survey found that 74 percent of CTM respondents attending JLT’s recent CTM conference had much more contact with chief officers this year due to worries about data breaches and cyber risk
“In light of a number of high profile breaches in 2014, cyber risk has risen up the business agenda as it has become increasingly clear to companies that neither size nor sector is a guarantee of protection,” noted JLT on the results. “There is a degree of skepticism that current cyber insurance policies offer a sufficient degree of cover and, by extension, payouts in the event of a claim. Nearly half (45 percent) of delegates’ worries about cybercrime were not offset by the insurance cover currently available. When asked what their dream cyber coverage endorsement was, unsurprisingly 43 percent responded that brand/reputation would be considered the most valuable endorsement, with coverage for non-damage business interruption also rated highly.”
Attendees viewed cyber crime as the biggest threat, specifically theft of funds or intangible property lost to hackers. Privacy breach events were considered to be the second-most problematic threat by 38 percent of delegates.
JLT also found that cyber extortion and regulatory actions occupy people’s mind far less, with only eight percent and 12 percent of respondents voting for them as the “single biggest” cyber threat. JLT observed that this might change as the European Union proposes tougher regulations for privacy protections.
When asked about how the insurance industry can best assist CTM professionals, nearly half (49 percent) requested greater understanding of the risks they face by insurers and risk consultants. Respondents also cited cyber terrorism and aggregation of cyber losses as “the next big cyber trend.”
Cyber terrorism and massive aggregated losses were both equally seen to be “the next big cyber trend” by insurers and technology companies polled. The systemic exposure of the insurance and risk industry is well known in terms of the potential for massive aggregated losses. Cloud computing is one example of this exposure, where one successful attack or failure could cause losses to hundreds of thousands of parties who hold their data within the cloud, putting insurers at risk for huge claims. Furthermore, cyber terrorism outlines the requirement and demand for these policy types to respond to evolving risks and ensure cyber insurance fits with other business lines where the insured is at risk.
Sarah Stephens, head of cyber, technology and media E&O at JLT Specialty, commented, “There is still much work to do in enhancing the general insurance coverage available to better offset cyber risks and improve our industry’s ability to communicate where the value of cyber insurance lies. While awareness of cyber security and consequently cyber insurance has risen substantially in UK companies, those buying cyber coverage remain in the minority, leaving a number uncovered and exposed to the growing risks.”
