Marsh launces Cyber ECHO: insurance for excess Cybercrime

24 February 2016 Consultancy.uk

High profile cyber breaches have become more and more common, and can be costly events for the companies involved – sometimes running into the hundreds of millions in losses. While companies have been moving to secure their boundaries, insuring low probability high impact cyber events has been costly. In a bid to provide a facility to cover cyber risks, Marsh has launched Cyber ECHO.

Following a number of high-profile hacks, including the US Government as well as a range of retail sites, companies have been seeking to bolster their front line defences through a range of measures. On the back of the serious damages involved, among others to the reputation of brands, board members too are becoming more involved in pushing through security measures. Defending the front-lines is one measure available in a company’s toolkit to deal with cybercrime and its aftermath.

Having an insurance policy that covers damages across a range of domains is another. Large businesses seeking to insure their company from cybercrime damages above $200 million have been met with increased difficulty however, facing high premiums and a lack of cover. This is particularly an issue for those that handle healthcare and payment card data, with cybersecurity underwriters becoming more selective while rates more than doubled in the US over the past 12 months.

Marsh’s recent announcement sees the firm provide global organisations with “reliable” insurance cover through a new cyber risk offering called Cyber ECHO. The new proposition aims to provide stability to the excess market through “up to $50 million in ‘follow form’ coverage for clients of any industry sector and risk profile around the world.” The new facility contains a pre-priced option that allows insureds to reinstate policy limits, in the case that they find themselves in a cyber-event during the period of the policy that has the potential to exhaust their policy limits. Cyber ECHO is underwritten by Lloyd’s of London syndicates.

Marsh - Cybersecurity

“While overall capacity in the cyber market remains abundant, the excess market is highly volatile,” says Bob Parisi, Marsh’s US Cyber Product Leader. “With Cyber ECHO, we are providing clients of all industry sectors with an efficient and more predictable excess coverage solution.”

One of the issues with cyber security policies has been the often disputed terms and conditions, following the relative immaturity of the market and the wide range of challenges created by adversaries. The new facility according to Marsh avoids ambiguities, and therewith, the sometimes costly disputes and/or delays in claims payments.

“Inconsistent wordings and varying terms and conditions between primary and excess insurance policies can contribute to significant delays in claims being paid and may even result in the failure to recover costs from insurers. Cyber ECHO helps to mitigate these issues, and is designed to aid in swift recovery from a loss,” comments Leslie Kurshan, Head of Product Development for the Financial and Professional (FINPRO) Practice at Marsh UK.

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Boards of top UK firms must do more on cyber-awareness

06 March 2019 Consultancy.uk

A new report released by the UK Government has found that UK businesses need to do more to build awareness in their firms, if they are to fend off cyber-attackers. The study found that an all-time high of 72% of businesses now see cyber-threats as a top risk, but just less than half of UK boards do not have a comprehensive understanding of the critical assets at risk from cyber-attacks.

Digital technology has revolutionised modern business, with a rate of innovation present in many companies that arguably eclipses that of the industrial revolution. The huge opportunities presented by technology mean that many firms have rushed to digitalise their offerings; but while this means they are able to take advantage  of the latest trends, it has also opened innumerable doors for cyber-criminals looking to use technology to loot corporations from across the globe.

Illustrating the extent to which cyber-crime has boomed in the last decade, in the final quarter of 2018, a study commissioned by Bromium and presented by Dr. Michael McGuire at RSA found that the cyber-crime economy has grown to an estimated $1.5 trillion dollars annually. That is only a conservative estimate – but that conservative figure alone is so large that if it constituted a national GDP, instead of a collection of digital frauds, it would be the world’s 13th largest economy.

Amid this state of play, it is easy to see why cyber-security has become one of the key watchwords of any board room in the 21st century. The cyber-security consulting segment has boomed, with the world’s 10 largest operators in the segment bringing in more than $11 billion in related fees, as businesses tap external expertise to help find areas where they can improve their defences. As noted by a new UK Government report, the legacy of this spike in consulting activity is that almost all UK businesses now have a cyber-security strategy, with only 4% admitting otherwise. 

Cyber threats are increasingly seen as high risk in comparison to other risks that businesses face

This comes at the end of a sea-change in attitudes toward cyber-security over the last five years. According to the 2018 FTSE 350 Cyber Governance Health Check, in 2013, the largest minority of businesses felt cyber-threats represented a low operational risk, at 38%, compared to just 25% who saw it as a very high group risk. Now, the two opinions have seen a dramatic reversal, with only 6% seeing cyber-security as a low threat, compared to a huge 72% of businesses which see it as a very high risk. Considering the high profile hacks that occurred in the interim, this is perhaps not that surprising.

However, while cyber-awareness in general is at an all-time high, this is where the positive news ends. According to the study, while the vast majority of firms in the UK have a cyber-security plan in place, only 46% have a dedicated budget to enact that strategy. Should their financial positions change rapidly in the near future – something increasingly likely with the prospect of a No Deal Brexit still looming over the horizon – then that plan could fall by the wayside, with the funding shortfall exposing firms to even greater financial damage in the near future.

The study, released by the Department for Digital, Culture, Media & Sport (DCMS) in March 2019, was undertaken in partnership with Winning Moves and support from EY, KPMGPwC and Deloitte, working with their FTSE 350 clients to participate in the survey. The study also found that while most businesses have incident response plans, most are not testing them: 95% of FTSE 350 businesses have an incident response, but a mere 57% test their crisis incident response plans regularly. With companies facing the consistently evolving threat of cyber-attacks, that could leave major chinks in their armour undiscovered until it is too late.

Board understanding of business-critical assets

Similarly, many firms also seem oblivious to the threat posed by their wider supply chains, which if left unchecked, provide hackers with a blank cheque to access company data. A majority of boards do not recognise supply chain risks beyond the first tier, as 77% of FTSE 350 businesses told researchers they did not recognise the risks associated with businesses in the supply chain with whom they have no direct contact.

Meanwhile, almost half of UK boards do not understand the critical assets at risk from cyber-attacks. 54% of businesses in 2018 rated the board’s understanding of critical information, data assets and systems as comprehensive, while of that, only 12% said understanding was the best it could be. This compares to 43% of boards in 2017 and 32% in 2015/16 stating they had a clear understanding, suggesting that key progress is being made, but also that there is a great deal of room for improvement.

Commenting on the findings, Digital Minister Margot James said, “We know that companies are well aware of the risks, but more needs to be done by boards to make sure that they don’t fall victim to a cyber-attack. This report shows that we still have a long way to go but I am also encouraged to see that some improvements are being made. Cyber-security should never be an add-on for businesses and I would urge all executives to work with the National Cyber Security Centre and take up the government’s advice and training that’s available.”