Webinar: Chubb, Hiscox, Paragon and IDT911 discuss challenges of cyber crime

Now that cyber-attacks are becoming a regular occurrence, the insurance industry is now honing in on a lucrative market.

Speaking at a Post webinar last week, experts in cyber security came to talk about how the insurance industry can develop cyber insurance products. 

Even though the industry has a range of opportunities in front of it, there are difficulties with the practicality of cyber insurance products, experts agreed. 

Recent legislative changes will pose an impact on how data is protected and how breaches are reported and there remain questions about how insurers can give its customers the best protection and cover.

One of the challenges is in educating customers on what the best cover is, said Erica Constance, senior vice president of cyber at Paragon International Insurance Brokers.

"They don't understand what the impact could be on their business on a monetary level," she said.

"They're not sure what's covered and what isn't because cyber insurance can mean so many thing and a breach of network security does not always result in a monetary loss."

Addressing what clients want it also an important step when developing a new cyber insurance product, says Tom Spier, director of business development of UK and European Markets, IDT911.

"A lot of businesses think that crime elements are covered under the policy, whereas it's the job of the market to react to that - it's their job to address the development of cyber-crime," said Spier.

"With cyber coverage, insurers have a real opportunity; typically when people buy insurance they don't really understand the value of it until something bad happens.

"Whereas with a cyber policy you have the opportunity to add value to that business and help them understand the risk that they're facing."

The wording of a cyber policy will vary from company to company however, at the core most wordings will be the same.

But Tim Stapleton, vice president, cyber insurance product manager at Chubb, said that there will be some elements of difference such as what triggers a loss.

"There will be more opportunities for cyber risks and malicious attacks whereas the same types of threat could cause damage to data within the organisation," he added.

"All the first party and third party expenses that the company incur to try and restore that to its original format will be covered under most policies available.

"Because you have those first and third party blends, the buyer will probably be required to notify more than they currently do under their current policy."

Matthew Webb, head of technology, cyber and data underwriting at Hiscox said that cyber insurance should be officially written into business interruption plans and policies.

"In an ideal world I think it should be written into the business continuity plan or into a separate incident response plan," said Webb.

"So when a data breach does occur, you're not dusting off your insurance policy, instead people are pretty clear.

"Insurers do provide the vendor response so that the incident response plan can be to liaise with management and then parachute in the forensics and understand where there's been a breach and prevent any more data leakage."

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