Companies’ digital and physical assets begin to merge in ways that were not possible even a few years ago. This raises the need for businesses to cover more than databases, email, customer tracking systems and intellectual property in case of a cyber-attack.
Dan Trueman, the global head of cyber at AXIS Insurance, says it’s time for insurers to wake up to the reality of their role in protecting companies from the effects of a digital aggression against their clients.
Should a cyber-attack occur, a company’s physical assets and supply chains may be affected. Businesses will be looking for ways to protect said goods.
Insurers can take advantage of this niche by including the potential repercussions to a company’s physical equipment that interacts with the digital assets.
In June 2017 the logistic giant Maersk Line fell victim to the NotPetya cyber ransomware attack, which caused the company a $200 to $300 million negative impact as reported in its Q3 results.
Maersk later acknowledged that its commercial insurance policies, including liability insurance for assets such as vessels and other materials, come with exclusions for cyber events; the commercial insurance products it purchased didn’t meet the full scope of its risks and the fallout was a direct, real-world impact on the company’s physical assets and commercial operations.
This kind of cyber-attacks open the opportunity for insurers to rethink how they approach these attacks and reevaluate the kind of coverage they offer. Insurance companies could integrate physical assets to their whole product offering to a company in the event of a digital attack.
What can insurers do from here?
- Understand that cyber-attacks often target intellectual property and intangible assets.
- Blend traditional cyber coverage with other lines of business coverage that may be tangentially impacted by a digital attack.
- Create offers that cover both a company’s digital assets and its non-physical assets (such as intellectual property and corporate reputation).
- Protect against new coverage gaps created by the evolution of risks from tangible to intangible assets.
The world is changing and cyber-attacks are becoming far more mainstream and normalized across most developed economies. The changing face of cyber security presents new challenges and opportunities for insurers to deliver a better product to their clients.