Cyber risk could become the next “mega-catastrophic loss” for the insurance industry, according to a recent report from Kroll Bond Rating Agency, which sounded an alarm on inconsistencies and confusion surrounding cyber insurance and recommended that only insurers with significant capital and expertise enter the business of underwriting cyber risk.
“While the industry is looking at cyber insurance as a possible growth opportunity, insurers must not lose sight of their own cyber security,” Kroll wrote in its report. “Late in 2015, the NAIC adopted a Cybersecurity Bill of Rights, designed to protect consumers. At that time, Commissioner Hamm said, ‘Consumers have a right to expect their personal, financial and health information entrusted to the insurance industry is secure.’ Additionally, Monica J. Lindeen, Montana Insurance Commissioner and Chair of the NAIC Consumer Liaison Committee, declared, ‘Cybersecurity is one of the biggest challenges facing businesses today and this is one of our association’s key priorities.’ This sentiment is echoed by the Federal Insurance Office, in its most recent Annual Report on the Insurance Industry, stating that cyber security for the insurance sector is an issue of national interest as insurers collect a great amount of personal and financial data.”
Kroll quoted Hamm as commenting, “Cyber could be fatal” for an insurer, and noted that regulators are paying close attention to the development of the cyber insurance industry with an eye toward insurer solvency.
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Erin is the managing editor of Advisen’s Front Page News. She has been covering property-casualty insurance since 2000. Previously, Erin served as editor-in-chief of The Standard, New England’s Insurance Weekly. Erin is based in Boston, Mass. Contact Erin at [email protected].
