FERMA says insurers must find a way to balance cyber risk appetite with the coverage requirements of risk managers
The Federation of European Risk Management Associations (FERMA) has called upon the insurance industry to adopt a more collaborative approach to cyber insurance.
It says insurers must find a way to balance the risk appetite of the market with the coverage requirements of risk managers and other corporate buyers.
FERMA has raised concerns that the cyber insurance market is evolving in isolation from the industries which it insures.
The body says that without more concerted dialogue between all parties – re/insurers, brokers, buyers (both largescale and SME), regulators, and service providers – there is a risk that the appeal of the cyber product for corporate buyers may decline,
This will be accelerated due to increasing exclusions and more restrictive coverage which are reducing coverage certainty.
”Recent decisions to restrict the scope of coverage have created uncertainty regarding the ability of insurance to meet the evolving cyber risk requirements of policyholders”
Philippe Cotelle, Vice President of FERMA, and Chair of the Digital Committee said: “The corporate market recognises the criticality of cyber insurance as well as the need for the insurance sector to manage its potential exposure to cyber risk, particularly given the systemic risk it poses. However, it is also important to ensure that the product remains attractive and efficient for buyers.
”Recent decisions to restrict the scope of coverage have created uncertainty regarding the ability of insurance to meet the evolving cyber risk requirements of policyholders, and in particular for larger corporations which in France, for example, currently make up over 80% of the cyber premium.”
Typhaine Beaupérin, CEO and Secretary General of FERMA, added: “To ensure the establishment of a robust and sustainable cyber insurance market for the long-term, it is imperative that all participants are contributing equally to its development.
”For many risk managers, cyberattacks pose one of the most significant and damaging threats to their organisation”
“Improved dialogue will not only help ensure a product which is fit for purpose but also help build stronger relationships between cyber insurance buyers and the market itself.”
To facilitate more constructive dialogue, FERMA has proposed the development of a COP-style annual cyber event.
The aim would be to bring together all key stakeholders to explore ways to develop and implement cyber resilience strategies of sufficient scope to address the myriad challenges of the digital age.
“We need to approach cyber-related risks in a way that is commensurate with the size of the exposure that it creates,” explained Cotelle.
“For many risk managers, cyberattacks pose one of the most significant and damaging threats to their organisation, while the systemic risk potential is recognised by all.
”By creating a COP-type event devoted to cyber resilience we can address this constantly evolving threat at the scale at which it needs to be addressed.”
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