Business owners need guidance rather than a federal reinsurance backstop to help them navigate an increasingly volatile cyber insurance market, a panel of experts said recently.
“I don’t think a compelling case has been made yet for an explicit government intervention,” said Phil Edmundson, founder and CEO of Corvus Insurance, an MGA focused, in part, on providing specialty insurance for small and medium-sized businesses that covers cyber attack and data breach-related losses. He was part of a pre-recorded Carrier Management panel discussion on cyber reinsurance scheduled to broadcast on Sept. 9.
Panelist Anjali Dharma-Wardana, an underwriter with MGA Envelop Risk, a global specialty cyber underwriter, noted there “is a little bit of a lack of coverage” for commercial cyber, but concurred about the idea that government shouldn’t yet step in to fill any gaps.
“When you think of these large U.S. corporate towers, they’re probably not getting the limits they need,” she said. “But something like government intervention – I think it’s way too early right now for that kind of thing.”
Marc Voses, a panelist, cyber expert and litigator with the law firm Clyde & Co., also agreed that a federal cyber reinsurance backstop was not yet needed.
“We’re just not there yet as a nation and we’re not there yet as an industry,” Voses said.
Voses added that such a program would be in response to “a doomsday scenario, which hasn’t presented itself yet.” With that in mind, he argued that federal, state and local governments can step in through multiple ways to offer guidance and help before a reinsurance backstop becomes necessary.
“Insurers need guidance. They need help. That’s why you saw insurers meeting with [U.S. President Joseph] Biden … to discuss these matters,” Voses said.
Cyber attacks have become increasingly broad and damaging, Voses noted.
“These are attacks on our businesses. These are attacks on Americans. These are attacks on companies worldwide,” Voses said. “Therefore, they merit a serious look at and assistance by the federal, state and local governments, and I think that’s what needs to happen. We need to educate our businesses and we need to provide them with tools in which to defend themselves.”
Edmundson pointed out that with the 20th anniversary of the 9/11 terrorist attacks this year, Americans know “that the unimaginable can happen,” and because of 9/11, the federal government took steps [including a federal backstop] to protect the economy and restore stability.
“We can probably take some confidence in what resulted from that event,” Edmundson said. “Just as with natural disaster, our federal government and the governments of other Western countries are likely prepared to step in if the overall economy, including the insurance sector, are threatened by a catastrophic event that we cannot even imagine. I don’t think a compelling case has been made yet to intervene” for cyber.
The full webinar – “Unlocking the Mysteries of Cyber Reinsurance” – will broadcast on Thursday, Sept. 9, 2021, starting at 1 p.m. Eastern. The free signup can be accessed at this link.