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ALLIANCES PROJECT: CYBER INSURANCE MYTH BUSTING

WHY?

Cyber poses a unique risk to every business in the Alliances portfolio, with each on their own journey to cyber maturity. Cyber insurance can be a critical component in how a company responds to, recovers from, and protects itself against incidents; it just requires the right approach. In the past, the pursuit of cyber insurance has proven immensely challenging, with unnecessary barriers to entry for those who don’t yet buy and soaring premiums coupled with reductions in limits and cover for those who are renewing… not to mention the resource strain involved. As businesses continue to grow in revenue and complexity, following the same generic approach with the placement of cyber will lead to a continuation of these problems. Cyber is far too complex and critical a risk to not get right.

Cyber insurance – The problems

Lack of clarity – Many businesses struggle to understand what they’re buying and why when purchasing cyber cover. Cyber insurance is often presented as a one-size-fits-all policy, with complex documentation filled with exclusions and subjectivities, leaving clients in the dark. Each business has unique reasons for purchasing insurance, and the policy must reflect this. This crucial aspect is often overlooked, and products rather than tailored solutions are seemingly the norm.

Collection of information – Businesses are led to believe they have only two paths to obtaining cyber coverage: filling out exhaustive questionnaires or pitching their entire security setup to a panel of insurers. Both approaches often lead to unsatisfactory outcomes and in every case, further questions. The questionnaire process is overly simplistic, resulting in numerous underwriter declines, while pitching to a panel of underwriters discloses unnecessary information and holds firms to unnecessarily high standards, whilst also brining into question the role of the broker. The time invested in both scenarios is large and unnecessary.

Wide pricing – Pricing for cyber insurance varies wildly (up to 200% between insurers) due to a lack of industry accepted pricing methodology, exacerbated by brokers typically approaching only a handful of underwriters for quotes (often for profit-based reasons). Limited underwriter appetite, combined with a lack of broker expertise and negotiation capabilities, results in significant pricing discrepancies and limited coverage. This is often portrayed as a problem with the business (generally framed as a security shortfall), rather than a flaw in the broking process.

Lack of proactive value – Generalist brokers often lack domain expertise in cyber, resulting in minimal proactive value outside the policy. Upon purchase, businesses are rarely provided with any colour on how they can actually utilise the policy, which panel vendors will participate in the event of an incident, and what the best steps to take in a claim are. As cyber is a catastrophic risk coverage and it is hoped never to be used, value must be derived from additional risk management services if the policy is to be perceived ‘valued’. Every underwriter and specialist broker will provide security led value, but the pipes are seldom connected.

Chapter Overview

Agenda

Date: 1st August, 2024

Time: 10:00am – UK Time

Audience: Alliances Community

Interactive Session Format:

1-hour Webinar.  We will follow Chatham House Rules in an interactive session where questions will be welcome from both the attendees and the Alliances team.

Title:

Cyber Insurance – Myth Busting

  • The Myths around cyber insurance
  • The truths

Welcome from Alliances

Chapter Moderator:

James Smith, Regional Director –  UK&I – Alliances

Leigh Thomas, Group Founder & Regional Director –  South Africa – Alliances

Chapter Leaders:

Cameron Crewe, Portfolio Manager – Assured Cyber Ltd

Focuses of the Chapter:

  • Introducing Assured Cyber Ltd
  • Problem statements – Cameron Crewe
  • How does Assured assist customers?

Use Cases

  • What problem(s) do Assured commonly come across?
  • What are the most common myths you see within cyber insurance?
  • What is the truth around cyber insurance?
  • What are the Success Stories?

Alliances Partners