Buyers split over where cyber cover should sit

Insurance buyers are divided over whether cyber property damage should be covered by standalone cyber policies or property insurance, just as insurers ramp up efforts to tackle silent cyber risks, according to a new survey of mainly US insureds by Advisen and Zurich.

The split fell in favour of cyber standalone policies at 49%, against 41% for coverage under property insurance. At the same time, almost 60% of survey respondents have bought standalone cyber policies.

The survey found a general blurring of lines between policies and coverage. More than one third of insurance buyers surveyed said they have cyber-related property damage and bodily injury cover under a policy other than standalone cyber.

A report on the survey, sponsored by Zurich, says buyers need greater “policy clarity”, with almost 60% concerned about gaps and overlaps in insurance coverage.

But it adds that buyers have greater awareness and confidence in cyber cover. The report says buyers are showing signs of “rising sophistication” as they identify their business cyber risks and match them to the policies.

As well as identifying gaps in their cover against internal risks, buyers have become more confident in seeking better coverage from insurers.

“Buyers want as much as they can get on their next renewals – higher limits, broader coverage,” says the report.

Some 62% of survey respondents said their cyber insurance met many of their needs, but buyers identified cyber-related business interruption and data breach as the main risks they need cyber insurance to cover.

“Business interruption needs have come more to the fore for buyers and insurance policies may need to shift in order to effectively meet needs,” states the report.

Some 95% of those polled said they expect business interruption to be covered in cyber policies, while 75% said they expect contingent business interruption to be covered. At the same time, 78% said they believe their policy covers business interruption and 9% said they did not know.

The report says buyers are looking for the same higher limits offered on insurance for business interruption caused by property damage, in cyber standalone policies.

“This clear market demand may drive the standalone cyber market to refine its offerings, bringing cyber-related business interruption limits up to the level of standard property forms,” the report says.

Some 30% of respondents experienced a cyberattack in the past year that caused either economic loss or business interruption. The survey recorded a 70% satisfaction rate for buyers that filed a cyber claim but many respondents reported that claims fell below retention levels.

“It appears the trade-off for buyers seeking higher limits may be greater retention. This is an equation that organisations need to revisit as they look at their cyber event experience and make the case for buying coverage in the future,” notes the report.

Back to top button