The General Federation of Insurance Associations (GFIA) has said that while the cyber insurance market continues to grow responsibly, there are challenges to growth that must be addressed.
Commenting on the OECD Insurance and Private Pensions Committee’s documentation on the cyber market and related issues, the GFIA highlights some challenges to further cyber risk market expansion.
“The cyber insurance market is an important resiliency tool with many ancillary benefits. Every year the market continues to grow responsibly as insurers innovate and address consumer needs and market demands,” says the GFIA.
Adding; “There are challenges to market growth, which the industry continually monitors and works to overcome.”
Often described as one of the greatest challenges and opportunities for the risk transfer community, cyber threats continue to evolve and are increasingly intertwining with other risks, such as terrorism. The cyber landscape is extremely complex and unpredictable by nature, and while positive steps have been made by the re/insurance sector, more needs to be done.
Among the challenges for growth, says the GFIA, “are educational and awareness gaps, a risk landscape that is continually evolving and a need for more data. IPPC members may want to consider reviewing the broader cybersecurity landscape to review how policy and regulation can support open market penetration through greater cyber risk awareness, data sharing and information sharing.”
The GFIA notes global confusion surrounding the insurability of fines and penalties, calling on the OECD to work to clarify this issue, something the GFIA says would benefit consumer and insurer contract certainty.
“As to the scope of the project, GFIA is of the view that beginning with an understanding of the importance of open, growing cyber insurance markets will lead to a balanced project focused on addressing the challenges to market growth, which is preferable to outcomes on regulatory strategies or best practices,” says the GFIA.
Continuing its engagement with the OECD on its new cyber project, the GFIA suggests a number of questions the OECD could ask its members around how legislation and regulation might affect products entering the market.
These include; Have regulatory or supervisory requirements or guidance that outline specific security measures had an effect on the insurance market? How do governmental authorities consider the effect of legislation and regulation on cyber markets? Do you conduct a cost/benefit analysis? Or consult with industry? Are there any current or planned legislative, regulatory or supervisory requirements (imposed by the insurance supervisor or other authority) that alleviate procedural hurdles for bringing cyber insurance products to market? And, Do governments support data/information sharing? If so, what policies and practices do they employ to do so?
For the cyber market to continue to develop in a responsible manner, analysis and discussion by the GFIA and other organisations, including insurers and reinsurers, is key.