Insurance industry risk managers confident in GDPR compliance: AM Best

Risk managers at insurance companies are reviewing both their own firms’ compliance with the EU General Data Protection Regulation (GDPR) and the opportunities it could deliver from increased demand for cyber insurance, according to a new briefing from AM Best. The rating agency found that industry players are confident in their preparations and rate their average level of readiness at seven out of ten. With less than one year to go until the regulation is implemented, AM Best said insurers and reinsurers will be challenged by the GDPR, which aims to make data protection laws more consistent across the EU. As well as imposing new requirements on companies processing personal data, the GDPR imposes mandatory requirements on companies to disclose data breaches or face heavy fines. Alvise Argenton, financial analyst at the rating agency, said: “European insurers have told AM Best they are undergoing a comprehensive review of their data-related risk management, looking at breach response plans and the resilience of their systems.” AM Best said insurance and reinsurance companies have also increased governance in direct response to the GDPR. Companies have sought new skills to address the challenges of assessing compliance with the new rules and adopting new policies, it added. Market players told AM Best that preparations for the new rules have led to reviews of roles and functions within their group and a closer integration of core functions including IT, compliance, legal and risk management. The insurance industry’s risk managers are also testing scenarios and implementing emergency response plans in preparation for the GDPR. Implementation of the regulation, which brings Europe’s data protection rules more into line with the US, is also expected to jumpstart the European cyber insurance market, which until now has been dominated by US demand. Mr Argenton said: “From an underwriting standpoint, the most significant consequence of the implementation of the GDPR is likely to be a marked growth in cyber insurance revenues, with some carriers suggesting it will represent ‘a shot in the arm’ for the non-US cyber market. The GDPR is, therefore, expected to represent a major change for the European cyber insurance market.” AM Best said it expects a spike in reported data breaches once the new rules take effect next year, which will increase risk awareness and boost demand for cyber insurance products. At the same time, widespread attacks, including WannaCry, are also playing their part in raising risk awareness of cyber threats. AM Best said supply of cyber insurance will catch up in the medium term as more reliable data is applied to underwriting and pricing models, leading to new cyber insurance products. “(Re)insurance companies expect some new products to make an appearance on the market, such as liability cover for new technology and connectivity risks. However, a far greater role is expected to be played by existing products, with industry observers indicating that carriers currently have untapped capacity in cyber insurance,” AM Best said.

Insurance industry risk managers confident in GDPR compliance: AM Best

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Related Articles