Insurers Face Cybersecurity Challenges, Says New Report

4 Insurance Takeaways From Lloyd's Cyberattack Report
– Law360

Law360 interviewed Manatt's Stephen Raptis and Susan White, partners in the firm's Insurance Recovery practice, for an article on a recent report released by Lloyd's of London that highlights glaring deficiencies in traditional and cyber-specific insurance policies.

Law360 reports that in the joint report, Lloyd's and the University of Cambridge Centre for Risk Studies laid out a hypothetical scenario where computer hackers infect electricity generator control rooms with malware, plunging 15 U.S. states into darkness and leaving 93 million people without power. The report noted a number of challenges that insurers face in trying to predict and model cyber risks in order to tailor insurance products, and it said that the sharing of cyberattack data involving a wide range of parties with an interest in developing resilience to cyberattack offers the most promise.

"We know that insurers as an industry collect data and share it with each other on first-party loss experience," said Raptis. "What that does is supply enough information to the industry that they're able to set premiums that will realistically reflect the risk. That could be positive or negative for policyholders: it may make premiums more expensive, but could also make them less expensive."

"Lloyd's notes that 'all risk' property policies are often silent on coverage for cyber-related losses, and there are certain exclusions that still could be ambiguous," said White.

Read the article here