Insurers expect rise in silent cyber losses, finds Willis Re survey

More insurers across the globe are expecting to report silent cyber losses across all lines of business except workers’ compensation in the next 12 months, according to a new survey by Willis Re. This year’s survey revealed that more than 60% of insurers believe they are likely to incur more than one silent cyber-related loss for every 100 non-cyber-covered losses during the next year across all lines of business, except workers’ compensation. This compares with less than 50% across all lines of business in 2017, the first year the survey took place. The risk of silent cyber is highest in the IT/utilities/telecom industry, where 42% of respondents said they expect ten or more cyber-related losses for every 100 non-cyber-covered losses in the next year. But insurers said the risk of silent cyber has increased across all industries. The survey results come as the International Underwriting Association (IUA) drafts a broad clause to address silent cyber risk. The clause can be inserted into almost any P&C insurance policy to totally exclude cyber exposures, although it includes a provision that would allow the contractual parties to agree to include cyber-related exposures on a case-by-case basis. According to the IUA, the exclusion is not an attempt by insurers to avoid covering cyber risk but a move to clarify cover. It should be a starting point for discussions between underwriters, brokers and clients about what is, and what is not, covered by a traditional commercial or specialty insurance policy. Anthony Dagostino, global head of cyber risk solutions at Willis Towers Watson, said: “The insurance market considers ‘silent cyber’, or cyber-related losses under policies where cyber risk isn’t specifically included, to be a far greater risk than ever before.” The increase in insurers expecting silent cyber claims is most pronounced for liability cover – excluding directors and officers (D&O), and errors and omissions (E&O), finds the Willis Re Survey. The percentage of insurers expecting cyber-related claims from liability policies increased from 35% in 2017 to 62% in 2018. Willis Re added that the percentage of insurers expecting losses from silent cyber risks in liability lines now matches property cover. Meanwhile, more than 30% of respondents said D&O and E&O – both new lines of business included in the 2018 survey – would be affected by silent cyber losses in 2018. The 2018 Silent Cyber Risk Outlook survey includes more than 700 responses from 100 insurers and reinsurers. Willis Re said the increase in anticipated cyber losses has been driven by growing reliance on technology and high-profile cyberattacks. The majority of insurers (60%) said they expect large cyberattacks on the scale of WannaCry and NotPetya to strike at least once every five years. Mr Dagostino said: “The 2017 WannaCry and NotPetya attacks highlighted this risk and potential damage across all business areas – causing significant concern around silent cyber. This increased risk perception has highlighted the need for specific cyber coverage, but competitive market conditions are limiting the scope for coverage or pricing adjustments to be made in other lines of business.”

Insurers expect rise in silent cyber losses, finds Willis Re survey

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