The Federation of European Risk Management Associations has published a report addressing the challenges faced by participants in the cyber insurance chain.
Central to the findings of the report, produced with the help of Allianz Global Corporate and Specialty, AXA XL, HDI Global, Howden, Lloyd’s, Marsh and Munich Re, is the call for greater collaboration between all cyber stakeholders to achieve a balance between insurers’ risk appetite and the coverage requirements of corporate buyers.
It also urges greater investment in identification and prevention measures, promotes the adoption of transitional coverage and continuous underwriting practices and proposes an annual high-level international summit focused on cyber resilience.
Philippe Cotelle, vice-president of FERMA and chair of the Digital Committee, said: “This report is the result of a ground-breaking pan-European dialogue across all core cyber insurance stakeholders. Our collective aim is to support the development of a bedrock of cyber resilience at the organisational level which is ably supported and enhanced by a robust, relevant and affordable cyber insurance market and which serves to bolster the overall competitiveness of the European market.”
Scott Sayce, global head of cyber, Allianz Global Corporate and Specialty, added: “Cyber is the top business risk in the Allianz Risk Barometer with ransomware, business email compromise and supply chain attacks on the rise, accelerated by AI and technology. Responding to the ever-evolving nature of cyber risk, the cyber insurance market has matured quickly in producing solutions and innovative approaches.”
Key report recommendations (Source: Cyber Insurance Dialogue – How Europe Can Lead the Way to Cyber Resilience – FERMA)
Key recommendations of the report include:
Identification and prevention
• For large corporates, improve identification and prevention by investing in quantification, benchmarking and crisis management training and protocols.
• Development of common EU cyber security standards for the SME segment.
• Awareness-raising campaigns/tools and incentivisation schemes for SMEs to invest in cyber security controls by public authorities.
• Continuing to work to a more standardised baseline questionnaire to be used in underwriting discussions.
• More training on technologies embedded in business processes and the necessary security.
• Transitional coverage offering for SMEs on cyber security journey.
• A more continuous underwriting approach for larger corporates focusing on greater feedback.
• Europe to become a global leader by addressing possible solution for risks that cannot be covered by private insurance market alone.
• Further discussion required around public and private cooperation to find solutions for evolving cyber risks (for example cyber war and systemic risk).
• Stress-testing scenarios to be developed and worked on by all stakeholders (public and private).
The report also calls for broader data sharing on cyber claims and the establishment of an annual cyber event that brings together stakeholders from across the insurance value chain and policymakers to address key market challenges and develop more effective cyber resilience strategies.