Partnership approach needed in current cyber risk landscape

As the cyber landscape and ransom attacks evolve, the onus is on insureds to protect themselves just as much as it is on insurers to provide coverage, says a webinar panellist. 

“The archaic method of underwriting risk has shifted dramatically in the past two years as a result of both COVID and the loss ratios that [the industry] has seen,” says Kelly McGuinness, underwriting team lead at Coalition during a Tuesday webinar.  

“The insurance companies and clients alike are in the same boat in the fight against bad actors, which creates more of a partnership approach between the clients and carriers,” says McGuinness.  

There is more onus on insured’s to lower their overall exposure to keep up with current market trends, she says.  

“If you think of auto insurance in this scenario, which affects all of us, as drivers we’re incentivized constantly to keep our premiums lower by reducing our overall exposure by way of having a newer model of car…winter tires, things of that nature,” McGuinness says. “With cyber insurance, the onus is on the insureds to lower their own exposure.”

“So more of a partnership approach arguably is being taken in the hard market, which benefits everybody, as far as I’m concerned. With the pace of the insurance industry has changed in the last year, clients are definitely stepping up to the task.”  

McGuinness notes the pandemic has caused clients to become more aware of their cyber risks.  

“We’ve definitely seen a stark increase in clients taking their overall exposure a lot more seriously,” McGuinness notes. “With that, mandatory security controls that we would have deemed very strong in the soft market are now deemed average — things like antivirus, firewalls, penetration testing, they’re assumed to be in place at this point.” 

However, insureds can put into place other controls to become more secure.  

“What we’d like to see in place on the newer risks is multi-factor authentication on remote access, emails and privileged accounts,” she says. “And an EDR solution, which is endpoint detection [and response] software, that monitors the behavior of anyone on many endpoints and sends the signal if anything is out of the usual norm to a security operation center.”  

As the threat quickly evolves, McGuinness notes the importance of staying on top of cyber trends. 

“An ever-changing environment is certainly the issue that we’re dealing with right now. Staying on top of that is, for underwriters and brokers alike, definitely very important.” 

Editors note: In an earlier version of this story, Canadian Underwriter misquoted Kelly McGuinness. We apologize for the errors.

 

Feature image by iStock.com/ALotOfPeople