Silent cyber concern falling across the insurance industry: Willis Re
Concern about silent cyber exposure fell across all insurance commercial lines and industry groups in 2019 compared to the previous year, according to Willis Re, the reinsurance division of Willis Towers Watson.
A significant fall in silent-cyber claims expectations among respondents could result from an absence of wide-scale cyber events in the 12 months prior to the global 2019 Silent Cyber Risk Outlook survey, admitted Willis Re, the survey’s author. By contrast, in 2018 attitudes may have been influenced by the NotPetya and WannaCry malware events, which were fresh in the memory, it said.
The survey measures the expectations of more than 600 insurance professionals, including people working in claims, underwriting, legal, broking and analytics. Specifically, it asks whether cyber exposures will increase the likelihood of a covered claim over the next 12 months under insurance policies not specifically designed to cover cyber risk.
It found that in property, the number of respondents expecting more than one new cyber claim for every 100 non-cyber claims decreased by 26 percentage points since 2018. Other liability is now perceived as more vulnerable to cyber risk than property, but the perception of risk has declined here too, although unlike property it remains higher than in 2017.
The only exception to the general decline in silent cyber risk expectations came from the number of respondents who expect one new cyber claim for every new non-cyber claim, which increased in every line between 2018 and 2019. “Although the numbers are small, the most sizable rise was in property, where the percentage of respondents with this claims expectation increased from 1 percent to 1.9 percent,” said Willis Re.
The report highlighted a correlation between size and risk expectation: respondents were more likely to expect more cyber-related claims when accounts are large, and fewer when they were small. In personal lines, cyber-related claims expectations were lower than in all other commercial lines other than workers compensation.
Mark Synnott, global cyber practice leader at Willis Re, said: “While it is likely that publicity surrounding cyber loss events has had a good deal of impact on the findings, I expect that insurers’ efforts to manage their non-affirmative cyber exposures, particularly in property lines, are responsible for some of the increased comfort they feel.”
Regulatory and boardroom pressure has pushed many insurers to mitigate their silent-cyber exposure, he added.
Peter Foster, chairman of global FINEX cyber and cyber risk solutions ay Willis Towers Watson, said the survey showed that insurers are making progress in gaining control over silent-cyber exposures, despite increasing demand for cyber coverage.
“It will be interesting to see if 2018 marked the high-point of concern, or if other factors such as future high-profile loss events again change the direction of silent-cyber claims expectations in 2020,” Foster added.