Cyber security is a pressing issue. With daily advancements in technology comes the need for a game of rapid catch-up in the security sector. Every day there are new products and solutions to help protect us from this growing threat. The challenge within the insurance industry is how to underwrite this constantly evolving risk.
During a recent AAIS Pulse, Jeff Cron, Senior Vice President of Cyber and Product Development at Berkley Re Solutions, said the lesson to be taken from publicized cyber incidents – like the Pandora Papers or Colonial Pipeline attack – is if celebrities and leaders who use sophisticated systems and protections are vulnerable, so is everyone.
In recent years we’ve seen large credit bureaus, major retailers, and hospital systems hacked, sounding the alarm to average citizens that their data can be easily accessed by bad actors. Mr. Cron emphasized that average homeowners and citizens need to be aware of the spectrum of cyber security risks out there and be careful about where they put and store their data. He says some of the most important actions they’re taking around cyber risk involve educating clients to get ahead of these attacks. Robert Hartwig, Ph.D., CPCU, industry expert and insurance professor at University of South Carolina's Moore School of Business, agrees. “We’re going to have to invest much more heavily in preventing these types of crimes from occurring to begin with,” explained Mr. Hartwig.
Mr. Hartwig admits that cyber security and cyber insurance remain in their infancy, and more difficult to understand compared to climate change because nefarious actors are unpredictable. However, he sees more and more insurers dipping their toe into the cyber market. He acknowledges that the risk is manageable “if” investments are made on the front end (i.e. awareness and education) to reduce severity and frequency on the back end.
Carriers interested in exploring the cyber insurance market are encouraged to review the AAIS Family Cyber Protection program, created in collaboration with Berkley Re Solutions. It provides coverage for an array of today’s cyber threats. Contact an Engagement Manager for more information.