The U.S. Treasury’s Federal Insurance Office this week called for the insurance industry to work toward offering cyber insurance coverage limits of up to $1 billion to effectively address the risk faced by organizations.
“Recently, concerns have been raised regarding the capacity and scope limitations of the cyber risk insurance market, with some market participants describing market capacity for cyber risks as ‘very small’ and observing that billion dollar coverage limits are needed to adequately address the losses posed by cyber risks,” commented the FIO in its third annual report on the insurance industry. “Insurers should continue improving underwriting processes for cyber risks by pooling insurance data; increasing capabilities for pricing non-data breach cyber risks, such as adopting the NIST Cybersecurity Framework into the underwriting process; and continuing to build subject matter expertise on cyber risks by engaging cyber security professionals to assist in the underwriting process.”
The cyber insurance market currently brings in between $2 billion and $3 billion in premiums, according to the FIO, a number that is expected to continue increasing.
The FIO also said that state insurance regulators should be focused on developing uniform standards “that are consistent across all states and which comply with best practices for oversight of financial institutions” for insurers to follow with regards to their own cybersecurity, hinting that states should look to the federal government for assistance.
“Insurers often collect and retain vast amounts of personal data, including health, financial, property, and family interests. For this reason, among others, state insurance regulators should prioritize and embrace the opportunity to work with and learn from the supervisors of other financial sectors in support of a nationally rigorous approach to cyber security … Cyber security for the insurance sector is an issue of national interest,” commented the FIO.
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].
