Because cyber risk is now a pervasive threat to all operating entities, it impacts practically every line of commercial insurance.
Yet, it remains unaddressed in many lines of insurance. The lack of clarity in some standard property and casualty policies can lead to confusion or misunderstanding about coverage for cyber risks.
Simultaneously, an insurer covering a loss it had not contemplated can jeopardise its credit rating and/or financial solvency. We refer to these potential cyber exposures as ‘silent’ cyber or ‘non-affirmative’ cyber.
Lyndsey Bauer, Partner at specialist insurance broker Paragon, provides an overview of silent cyber and the responses that insureds should take going forward, writing in a new white paper.
The white paper, available in full on the Airmic website, leads with an overview of the current environment, including policy options for buyers, as well as potential arguments for insurers denying cover.
The document then describes the market response to silent cyber, including exclusions on directors’ and officers’ liability and on and crime insurance products, property and marine affirmative covers, standalone cyber policies, providing options for insurance buyers.
“Insurers and regulators are taking action to address the risk of silent cyber. Policy language is evolving and that is impacting coverage. Besides being untested, the drafted language could also overreach.
“Policyholders face the challenges of getting inconsistent responses from their insurers, inadvertent loss of intended coverage and programme gaps.
“Finally, insureds should prepare for renewal – they should develop a strategy, identify renewal priorities, approach the market with C-suite support and always review feedback.”
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