Risk managers must beware sacrificing cyber coverage for premium

Companies and their risk managers have been told they need look to long term relationships when it comes to choosing a cyber insurance partner.

The warning came from Nick Barker head of insurance broker Gallagher’s Specialty Cyber Practice as risk managers gathered in Madrid for the FERMA Forum 2024. He explained that for many the key to the delivery of a successful risk management strategy was the use of long-term relationships.

“There has been an influx of capacity, in the cyber risk market, and while it increases choice it can also lead to difficult conversations,” he said. “We are always telling our clients that they should beware of sacrificing coverage for premium.

“There are a lot of players popping up and doing so with very competitive pricing. Cyber is a very broad risk and we believe that it can be best managed via long term partnerships with insurers.

“Understanding your risks, communicating that to an insurer who has been a partner for some time is likely to deliver the best outcomes for both sides.”

Barker continued that increasingly risk managers and businesses were coming to the broker in an effort to get a broader view of the risks and how they could be quantified within their operations.

He added: “While cyber has been around for 25 years in many ways it is still and emerging risk. Every organisation now relies in its technology as increased digitalisation continues. They want to take advantage of the efficiencies it can deliver but it comes with risks.”

“Cyber still is not where we want it to be in the risk agenda,” Barker explained. “It is getting there, and the impacts of increased supply chain management and the CrowdStrike event have become good examples of what can go wrong.”

Barker said risk management had to be front and centre when it came to IT and wider technology but that it had to be remembered that it is not just the technology but the people which have to be considered.

“When it come to risks the insurance, the market has a tendency to be reactive, but organisations are keen to look at ways they can tackle emerging risks,” he explained. “Cyber has moved at quite a pace in recent years but the more established carriers are still willing to have a conversation and underwrite the risks.”

“We are always looking to work with those who look to tackle the issue.”

Barker said at present there has been a rise in litigation around the use of tracking technology such as cookies when visiting the internet. “It has been a topic recently and we do see a variance in approach to

issues such as those for the European and London markets.”