How cyberdefences can reduce insurance costs
Businesses that are proactive in reducing their potential risk to cyberattacks by using new technologies such as blockchain, or using best practice, are likely to see that reflected in better pricing and conditions from insurers.
That is the view of Noel Pearman, senior vice-president and cyber product leader at XL Catlin.
He moderated a panel discussion, titled Impact of Cyber and Emerging Technology Risk, at the Bermuda Captive Conference, held at the Fairmont Southampton this week.
“Companies that are leveraging technologies the best, leveraging the best practices in order to mitigate their risk, they should see that reflected in the terms and conditions that they are offered by the market,” he told The Royal Gazette.
“Blockchain is going to be a game-changer, both for insurers and how all sorts of transactions take place across the entire community. We are at the very nascent stages now. Blockchain is a good technology to reduce risk for an insurer.”
He said a number of major insurance companies now have mature cyber products on the market, and that number will continue to grow.
“This is a natural evolution considering that cyber is no longer a niche product. It is a product designed to encompass more of the risks that come from having interconnected networks running your business from the front end to the back end.
“That maturity is expected. Eventually the claims that come out are going to shape what the product looks like in respect of prices and terms of conditions.”
Mr Pearman believes there will be a shift away from insurers putting cyber exposure into one bucket that is dealt with by “expert cyber people” but excluding those who work in other lines.
“That is not going to work long term,” he said. Instead, he sees the need for professionals dealing with all insurance lines to have a good understanding of cyber-risk and how it can impact their lines of business in terms of pricing and losses.
“Cyber being a peril that cuts across all lines, eventually everybody is going to have to learn about how cyber liability affects what they do.
“With property, you are going to have to learn the cyber triggers to your property exposure; the same for general casualty, and D&O. That's where things will end up.”