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Article | Insurer Insights

Silent cyber’s specter is casting a larger shadow on insurers

The new normal for big cyber events mobilizes carriers

By Jess Fung | March 5, 2019

The specter of silent cyber exposure has risen for insurers with recent headline cyber-related losses testing their preparedness. How can insurers manage this new normal?
Cyber Risk Management

In 2017, significant cyber events such as the NotPetya malware attack and the Equifax data breach grabbed international headlines and put the spotlight on cybersecurity, just months after Willis Re conducted its first insurance industry survey studying the perceived dangers of silent cyber risk (i.e., coverage under policies not specifically designed to cover cyber).

For insurers, the resultant claims and losses in lines as diverse as property, marine, and directors and officers (D&O) liability have left their mark.

Significant levels of expected cyber-related losses across all five lines of business surveyed (see About the survey) were evident in the 2018 Silent Cyber Risk Outlook  global survey. Over 60% of respondents say they will likely incur more than one cyber-related loss for every 100 non-cyber covered losses over the next 12 months in all lines of business except workers compensation — compared with less than 50% who envisioned this in any line of the classes of business surveyed in 2017.

The shift in perceptions over the past year is most pronounced in the other liability line of business. In 2017, only 35% of respondents perceived the silent cyber risk factor as greater than 1.01, but in 2018 this percentage increased to 62%. Of these, close to 30% assigned a risk factor of 1.10 or greater, a figure matched for the property line of business (Figure 1). In workers compensation, while the perceived risk level is lower than in the other classes, it has risen nonetheless, with about a third of respondents assigning a silent cyber risk factor of over 1.01.

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