23rd January 2022
This third and final report in The Geneva Association’s and IFTRIP’s series on cyber terror and cyber war examines the insurance industry’s ability to underwrite risks linked to hostile cyber activity and the role of public-private partnerships in future insurance solutions.
Threats to cybersecurity are one of the top risks facing businesses in the post-COVID world. The cyber landscape is evolving rapidly, and a recent uptick in the scale and frequency of cyberattacks has prompted insurers to revisit their underwriting strategies.
State-sponsored cyberattacks that stop short of outright military conflict–or hostile cyber activity(HCA)–pose a particular challenge for insurers due to the sheer scale of potential accumulated losses. This has led to a significant protection gap for incidents in this category.
The report assesses the potential of private insurance markets to cover HCA risks, finding that catastrophic HCA risks cannot be absorbed by re/insurers alone. Some form of government backstop or public-private partnership(PPP) will be needed to foster socio-economic resilience to these perils.
Insurers and the public sector should take the following key considerations into account to ensure any future scheme - -Will it be compulsory or voluntary?
-Will it offer single or multi-peril coverage?
-Will coverage be parametric or indemnity-based?
-Will funding be provided pre- or post-event?
-Will the scheme be based on mutuality or solidarity principles?
-Will it be permanent or temporary?
Geneva Association Trends(111 articles)
Cyber Trends(1,222 mentions in Insurance Newslink)