Cyber merchandise proceed to be troublesome for insurance consumers and potential sources of capital – just like the ILS market, which is “keen” to see cyber merchandise coming by means of – to perceive, in accordance to Haran.
“Definitely outside of the US, we’re still lacking a lot of education and awareness about cyber insurance [and its] benefits,” Haran stated. “It should be part of an overall risk management and risk mitigation approach. Cyber insurance on its own, it’s not sufficient, but still we hear from markets like Japan, Latin America, a total lack of understanding about the product, and a total lack of willingness to buy and purchase those products. I think this is something that we as an industry should work hard in order to change.”
One technique that would drive better consciousness and uptake of cyber insurance may contain simplifying the product.
“What we see today is lengthy terms and conditions, you … have to be a lawyer in order to understand, and also then not necessarily be sure that you will get what you need to get in the moment of truth,” Haran stated.
“In this respect, we see an interesting trend that we definitely follow and promote, [and that is] a parametric approach. Since many of the cyber events are really black and white, I think a clear claim settlement process and moving into a parametric model would definitely simplify the approach of the industry.”
Haran spoke at S&P Global Ratings’ third annual cyber insurance seminar, and was joined on a panel by Manuel Adam, S&P Global Ratings affiliate director, and chair Simon Ashworth, S&P Global Ratings head of analytics and analysis – insurance.
Panellists had been requested to fee how optimistic they had been for sustainable progress of the cyber insurance market on a scale of 1 to 10.
“It’s true that when you look at the projections for cyber insurance that were released in 2010 or 2012, we should have seen a market double in its size than the market as it is today, but still I think that there is so much room for innovation,” stated Haran, who scored his optimism at a ten.
“It’s a totally new field, a growing one, and I’m sure that with all the minds that are being invested, the effort that is being invested, and the capital that is being invested in this domain, we will definitely see an emerging amazing market.”
The S&P representatives had been extra cautious, with Adam scoring his optimism as an eight and Ashworth an 8.5.
“The catalysts including the fast-evolving technology, elevated cyber awareness, and expansion of products and services are off-balancing the challenges, but insurers need to understand even more the complexity and dynamics of cyber insurance to successfully and efficiently provide coverage, otherwise the challenges could dominate the catalyst going forward,” Adam stated.
“We nonetheless have an enormous safety gap given the excessive global financial price of cybercrime and the comparatively small insurance market, as capability is without doubt one of the important points for sustainable cyber market improvement.
“I’m really excited on future partnerships between primary insurers, reinsurers, and the capital markets and those partnerships could really provide more capacity, could strengthen coverage and give better balance sheet protection against frequent and high severity losses for policyholders around the globe.”
Ashworth stated his rating was “not really because I’m an eternal optimist, but because I’m a realist and it’s really vital to ensure the relevance of the insurance sector as a whole.”
