Federation of European Risk Management Associations (FERMA) has called upon the insurance industry to adopt a more collaborative approach to cyber insurance in order to strike a balance between the risk appetite of the market and the coverage requirements of corporate buyers.
FERMA has expressed concerns that the cyber insurance market is evolving in isolation from the industries it insures, leading to increasing exclusions and more restrictive coverage, which may ultimately undermine the appeal of cyber insurance for corporate buyers.
Philippe Cotelle, Vice President of FERMA and Chair of the Digital Committee, emphasized the criticality of cyber insurance in today’s business landscape. Cotelle highlighted the need for the insurance sector to manage its exposure to cyber risk, given the systemic risk it poses.
However, he also stressed the importance of ensuring that the cyber insurance product remains attractive and efficient for buyers. Recent decisions to restrict coverage have introduced uncertainty regarding the ability of insurance to meet the evolving cyber risk requirements of policyholders, especially larger corporations that currently account for over 80% of the cyber premium in France.
Typhaine Beaupérin, CEO and Secretary General of FERMA, echoed these sentiments, emphasizing the necessity of all stakeholders actively participating in the development of a robust and sustainable cyber insurance market.
Beaupérin emphasized that improved dialogue between re/insurers, brokers, buyers, regulators, and service providers is crucial not only to ensure a fit-for-purpose product but also to foster stronger relationships between cyber insurance buyers and the market itself.
In an effort to facilitate constructive dialogue, FERMA has proposed the establishment of an annual cyber event inspired by the Conference of Parties (COP). This event would bring together key stakeholders to explore ways to develop and implement cyber resilience strategies that address the complex challenges of the digital age comprehensively.
“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,” Cotelle added.
