Cyber Insurers Increase Scrutiny Amid Pandemic
Heightened cybersecurity risks triggered by the outbreak of COVID-19 are causing insurers to grill policyholders more closely.
According to the Wall Street Journal, insurers have increased their scrutiny of policyholders’ security arrangements as the rise in remote working drives up risk.
Stephen Vina, a senior vice president in Marsh & McLennan Co.’s cyber insurance brokering business, told the WSJ that insurers want more details than ever before.
Describing the surveys insurers ask companies to complete so that their risk can be assessed and their premiums calculated, Vina said: “There are a lot more questions being asked.”
Companies are now expected to supply more details than before regarding how they would respond to a data breach and what action they would take if hit by ransomware or any other form of cyber-attack.
Depending on how the companies answer the survey, they could end up with a costlier policy or in some cases be denied coverage.
Vina said insurers are deeply concerned that working conditions during the pandemic will expose companies to additional risks that simply weren’t considered when their insurance policy was being created.
For example, companies that had tight control over the security of employees working in a central office could face increased and unplanned-for risks as workers toil remotely to comply with lockdown measures, relying on home networks and personal equipment.
Chief innovation officer at London-based insurer CFC Underwriting Ltd. Graeme Newman said policyholders were being asked to show insurers that remote-working situations had been taken into account in their business continuity plans.
Cyber-insurance claims have increased as data breaches and ransomware attacks continue to blight every industry. According to data from regulatory filings compiled by Fitch Ratings, direct loss ratios for stand-alone cyber-insurance policies rose to 47% in 2019 from 34% in 2018. Direct loss ratios measure the percentage of income paid to claimants by insurance companies.
Fitch managing director Jim Auden said that although the data is incomplete because it doesn’t contain certain elements, including reimbursements insurers received from their own insurers, it is a good indicator of overall trends.
He said: “We think that with more risk being covered, and maybe newer underwriters getting into the business that don’t have that pricing expertise, that’ll lead to more losses over time.”
This post Cyber Insurers Increase Scrutiny Amid Pandemic originally appeared on InfoSecurity Magazine.
