Some thoughts from the IUA on cyber claims;
The cyber insurance market would benefit from clear protocols governing the review process for business interruption claims, a new report from the International Underwriting Association (IUA) has stated. Such claims are often complex in situations where a tower structure has been established, with multiple insurers providing layers of coverage for large risks. An established framework, covering questions such as the appointment of experts, fee sharing, and information flows could bring greater consistency and efficiency to the process.
The IUA’s new paper outlines how the layered structure of cyber towers currently pose a number of challenges for reviewing claims. So called ‘split market reviews’ can be fragmented with duplicated effort and other wasteful procedures. Compared to traditional insurance sectors, like property, the cyber insurance sector is still relatively young and established protocols are still emerging. Many claim handlers are building their business interruption experience as the market grows.
‘Split Market Reviews in Cyber BI Towers: Why It’s Time for a Rethink’ has been published by the IUA together with the leading advisory, tax and assurance firm Baker Tilly. It argues that there is a growing appetite for reform.
Joe Shaw, IUA Director of Claims, said: “Each organisation, within often quite intricate insurance structures, is working towards the same goal – an efficient and fair resolution of the claim. Yet a lack of coordination can inadvertently introduce delays.
“A market protocol sitting within a tower policy wording, could provide clarity for all participants on what to expect if and when an incident occurs.”
Ben Hobby, Partner at Baker Tilly, said: “Business interruption is often perceived as one of the more challenging aspects of the cyber claim process. We are therefore delighted to partner with the IUA on this report, where we share some of our thoughts and observations, based on our own claims experience, of what a market protocol could include to help smooth the process for insurers and policyholders alike.”
To build on the findings of the new report, the IUA will, in the coming months, be convening market practitioners to consider potential solutions and practical next steps for the cyber insurance market.
The association operates two formal discussion forums for cyber business in the London company market – a Cyber Underwriting Group and a Cyber Reinsurance Committee. Copies of the new report are available at iua.co.uk/cyber.
Be the first to comment