Silent cyber coverage: The reckoning

By Chad Hemenway on February 24, 2017

SAN FRANCISCO—If the headline sounds like a title to a horror movie, that may be appropriate because according to panelists here at Advisen’s Cyber Risk Insights Conference, detecting “silent” cyber coverage risks is a nightmare.

Due to an increasingly complex interconnected world, the potential for a cataclysmic cyber event cascading across multiple lines of coverage casts a shadow over the industry.

The issue is “far more of a concern than affirmative cyber [coverage] we underwrite and price,” said Brad Gow, senior vice president at Endurance. “We’re talking about legacy lines of business drafted far before this was a concern. With the Internet of Things, the attack surface grows exponentially.”

Kara Owens, vice president at Trans Re, said the reinsurer is taking a very close look at underwriting throughout the world and has found that “a lot of treaty wordings do not address cyber.” The organization is attempting to get a better grasp of accumulation potential by running proof-of-concept scenarios of “clash events” and then examining policies to determine if cyber is included, how it was priced, and whether aggregation risk could be a problem.

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Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or chemenway@advisen.com.