The opening panel session of DWIC 2020 was asked to answer the question of when businesses in the MENA region will start buying cyber insurance, and the answer may surprise you
Panellists on the cyber insurance session at the Dubai World Insurance Congress 2020 said the myth needs to be put to bed that businesses in the MENA region are not buying cyber insurance.
Speaking on the panel, Simon Dodsworth, head of specialties, senior vice president at Lockton, says it is more a question of whether businesses are buying the right type of cyber policy.
“Clients are buying cyber,” he says. “It is more a question of whether they are buying the right cyber, with the right quantum of cyber insurance.
“But we don’t do ourselves much of a favour with this as an industry, because we think about cyber as insurance, but cyber risk is much more than that, it is a service rather than an indemnity policy.”
And fellow panellist and Marsh MENA cyber leader Simon Bell says by focusing on selling the right type of policy for the right risk profile, the cyber insurance industry can open up a whole new range of markets to sell policies to.
“We have seen massive growth in cyber in recent years,” he says. “Clients in MENA are buying cyber insurance, but it is still only the early adopters such as retail and financial institutions.
“But we are now starting to go into the industrial, petrochemical and big manufacturing or heavy metal industries where previously they haven’t seen the exposure. But now we are seeing a lot more global instances, particularly in physical damage and ransomware, and people are starting to take notice.”
Tokio Marine Kiln cyber underwriter Alex Jomaa agress, and says that one of the issues that is preventing more businesses from buying cyber insurance is that the industry is focusing too much on the liability issue.
“It makes sense that we followed that route, because that is why they are buying cyber in the US,” he says. “But outside of the US we don’t have insurable fines, and we don’t have large consumer class actions that result in a punishing settlement.
“The majority of the claims we are seeing at Tokio Marine Kiln are from first person losses and a lack of availability of systems and corruption and integrity of data, largely driven by ransomware.”
And Bell says it is only recently that ransomware is coming to the fore of the minds of business leaders, leading to an increased spend on IT security and opening up new avenues by which brokers can sell cyber policies.
“It is only in the last couple of years that we have seen a big ramp up in IT security spend,” he says. “There are exceptions to this such as the big financial institutions and retailers, but that upper corporate segment have been relying on on-house IT and individual expertise, but that is really changing now people are starting to see more instances of ransomware.”
And Jomaa says the onus lies with brokers to ask for more information from their carriers in order to increase the strength of their sales proposition.
“As an underwriter I only see information on the claims that I pay, but brokers get to see it from all of their carriers,” he says. “So brokers really should be pushing their carriers for their claims information, because that is the only real way to sell these products.”