How is the Insurance Sector Tackling the Cybersecurity Challenges?

CIO Review APAC | Tuesday, July 13, 2021

Insurers have begun to employ cyber risk assessment tools to understand their customers' security readiness better. These tools generate a cybersecurity rating comparable to a credit score but based on security criteria.

FREMONT, CA: Despite many of them implementing strict cyber-security policies, data breaches, malware outbreaks, phishing, ransomware, and other assaults have troubled minor and major businesses. The frequency of cyberattacks has increased dramatically, as have the costs associated with them, and businesses face the damage. Cyber insurance has a crucial role to play in mitigating the effects of cyber assaults that occur despite strengthened security in the COVID-19 era, as they try to strengthen their IT security further.

The insurance sector is working overtime to address the following challenges to give better value to policyholders who are victims of a cyber-attack:

Low Understanding of Both Cyber Risk and Cyber Insurance

Many businesses are uninformed of the entire scope of cyber dangers they face, as well as the insurance coverage available to protect them against them. They only grasp the importance of insurance after they have been the victim of a cyberattack. To decrease the number of such institutions having to learn about cyber insurance the hard way, the insurance industry has been at the leading edge of sharing knowledge about the types of cyberattacks, distinct threat actors, and the financial implications of a security breach within the sector so that forewarned they could be forearmed.

Incomplete Underwriting Information

Underwriters rely on information provided by potential cyber insurance customers to provide the proper kind of coverage at the right price. To make it easier for clients to supply the appropriate information, insurers need customers to fill out a proposal form or questionnaire. This questionnaire is frequently incomplete, leaving the underwriter in the dark regarding the risk to be covered and the customer's cybersecurity readiness to cope with cyber risk. As a result, coverage is sub-optimal or non-existent in some circumstances. It is beneficial for businesses to give all of the information requested in the proposal form.

Customers find it difficult to answer the underwriter's questionnaire for a variety of reasons. Sometimes it is a lack of understanding about their own cybersecurity procedures; other times, it is apprehensions about delivering the answers. Because insurance is a contract of absolute good faith, the information requested by the underwriter must be provided with care. Insurers have begun to employ cyber risk assessment tools to understand their customers' security readiness better. These tools generate a cybersecurity rating comparable to a credit score but based on security criteria. This recent invention is assisting underwriters in better assessing and pricing the risk.

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