The development of cyber insurance as a standalone product will be crucial if businesses, governments and insurers are to deal with escalating cyber threats, according to a Viewpoint Report from JLT Re and JLT Specialty Unlocking the Potential of the Cyber Market.
Organisations’ are increasingly calling for innovative and comprehensive insurance products but concerns around cyber exposures potentially buried in traditional policies have so far held back carriers from providing these solutions.
There is considerable concern among insurers for potentially catastrophic and/ or systemic cyber events, where one cyber event is capable of triggering multiple claims under different policies at national, or even global levels.
These concerns have been growing as technology has become further embedded in the operations and strategies of organisations and as malicious actors look to exploit the vulnerabilities associated with innovations such as the Internet of Things, cloud computing, automation and connected devices.
Within the insurance market there has been a debate about whether cyber is a peril that falls under the scope of traditional products or a line of coverage in its own right. However, a more resilient cyber insurance market should result from the development of the cyber insurance market with a standalone product at its core, according to the Viewpoint Report.
This shift would benefit insurance buyers in the form of greater certainty, expertise, capacity and stability from the insurance market in what is an increasingly complex and expanding area of risk.
The standalone market is best placed to facilitate innovative and comprehensive solutions that address buyers’ changing needs and future cyber risks. It will also be more resilient to future catastrophic cyber losses and better positioned to trade through future systemic losses, concluded the report.
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