Page 23 - Insurance Times October 2019

exposures - those not covered by traditional property and potential losses, as most don't intend to cover cyber risk.
casualty (non-life) policies and create a great deal of Most traditional policies were designed when cyber hadn't
uncertainty for customers, brokers and insurers, alike. In yet emerged as a major risk and don't even explicitly
the past few years, cyber risks have gone mainstream. mention or consider cyber risk. Such 'silent' or 'non-
affirmative' cyber exposures lead to inadequate protection
For the first time in the eight-year survey, cyber incidents of customers with a lack of certainty and transparency for
are the top global risk in the Allianz Risk Barometer 2019, all parties involved - customers, brokers and insurers. A new
tied with business interruption (BI). Cyber incidents can insurance approach is required to effectively counter new
trigger not only extensive financial or disruptive losses but, risks posed by cyber and to remove coverage uncertainty
potentially, physical damage, BI, product recall, bodily injury for customers.
or even have caused life-threatening consequences.
New Allianz Underwriting Strategy for
Cyber risk goes mainstream and evolves
Cyber
rapidly Group-wide, Allianz is reviewing cyber risks in property and
The nature of cyber risk is evolving rapidly and constantly casualty policies in commercial, corporate and specialty
with hacker attacks becoming more sophisticated, targeted insurance segments and has developed a new underwriting
and far-reaching. The 2017 WannaCry and NotPetya attacks strategy to address 'silent' cyber exposures, ensuring that
highlighted the risks and potential damage across all all property and casualty policies will be updated and
business areas causing significant concern around cyber clarified in regard to cyber risks. A Centre of Competence
risks in traditional property-casualty policies. Companies for Cyber will be established for the entire company.
increasingly are exposed to large-scale, multi-vector mega
attacks using advanced attack tools, often outpacing the Allianz will make it clear how cyber risks are covered in
maturity level of corporate IT security systems. traditional policies and for which scenarios a dedicated
cyber insurance solution is needed. The new strategy will
Besides cyber-crime, often it is technical failure, IT glitches also respond to growing concern from regulators and rating
or human failure which causes massive system outages or agencies about cyber exposures in insurers' portfolios.
data losses. 'Silent' cyber scenarios could include a hacker
attack on a transit system causing a train derailment or a What will change?
malware-infected, GPS-linked navigation system incorrectly For policyholders, the set-up depends on the line of
guiding a ship. Another silent risk might include a hacker business, as well as the market and regulatory environment.
creating significant disruption by opening the floodgates at If unclarified, cyber exposures with clear definitions of
a hydroelectric dam, likely causing significant downstream when cyber risks are and are not covered in traditional
flood damage and potentially triggering property policies. policies will be specified in policy wordings. There is no one-
size-fits-all approach. A comprehensive solution for all
In such cyber- or tech-driven incident scenarios, it is often products - while extremely challenging - is best for
unclear whether or not traditional policies would cover the everyone involved. This keeps specific cyber expertise in
the lines of business where they've traditionally been
underwritten and also benefits customers by providing
certainty about the products they've bought.

Policyholders will choose among several options to tailor
cyber risk coverage to their individual needs and risk
profiles - ranging from 'now-affirmative' coverage in a
traditional P and C policy to an endorsement embedded
into a traditional policy to a specialist cyber insurance
policy. In many cases, cyber event definitions will be added
to existing wordings (e.g., property offers a dedicated cyber
BI extension).

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