With a newly launched cyber insurance product broker Arthur J. Gallagher is targeting some of the gaps in existing cyber coverages, a step that could help to open up some of the untapped cyber exposure to the market which could generate significant reinsurance demand.
Backed by A rated Lloyd’s of London capacity led by strategic partner Brit Insurance, Arthur J. Gallagher (AJG) has rounded up a consortium of providers to enable it to offer a cyber insurance product to manufacturer clients that would close some of the cyber protection gap.
Today it can be very difficult to buy protection for what are some of the most extreme cyber risks. Control systems, so the discrete technology platforms that operate specific systems within manufacturing and industrial buildings, are acutely exposed to cyber risk and the losses that could manifest could be significant.
Hence buying cover for such risks has been difficult and this type of cyber physical damage coverage is not widely available.
But AJG’s new product aims to respond to the ‘perfect storm’ that manufacturers face, which the broker terms as “A rising risk of cyber-attacks, coupled with increased vulnerability and largely excluded exposures.”
As a result, AJG has designed and developed a bespoke cyber policy which it believes will more effectively transfer the sectors unique cyber risks.
A custom wording has been created, in conjunction with manufacturing trade bodies and global Fortune 500 companies, so as to ensure cyber coverage most closely matches the emerging exposures the sector faces.
The specific areas of cyber protection gap AJG is targeting against property damage and bodily injury resulting from a control system interruption, which is typically excluded from cyber coverage, as well as bespoke cover for increased cost of working, contractual penalties and contingent direct supplier interruption due to a cyber-attack, also normally excluded from property policies.
Tom Draper, Technology & Cyber Practice Leader for Arthur J. Gallagher, commented; “The connected world has been embraced by manufacturers to deliver significant efficiencies and advances. But with that connectivity comes new threats — such as the convergence of industrial control systems with ‘hackable’ enterprise systems which poses a potentially catastrophic risk.
“On top of that, manufacturing is now one of the most frequently hacked industries, second only to healthcare — largely due to the volumes of intellectual property held by manufacturers or through corporate espionage.”
Despite the fact cyber risk exposure is growing all the time and corporations are becoming increasingly aware of this, the coverage has not been evolving to meet the client need.
“So we tackled this vulnerability head on, designing a global policy to bridge these gaps while also offering loss mitigation services through independent security consultants to provide end-to-end risk protection,” Draper explained.
Access to reinsurance capacity will have been key to get this new product into the market, as some of these risks will have both significant exposure and long tails, meaning that reinsurance support to close the gap through product development will have been vital.
By targeting these gaps, which are not just applicable in the manufacturing industry but also in industrial, energy and other facilities based corporate environments, AJG is opening the doors to levels of risk that will need significant capacity support, as well as creativity in how to reinsure the portfolios of cyber risk that are underwritten.