The Federal Insurance Office has made it clear that it considers cyber insurance to play a crucial role in encouraging cyber security of companies as well as providing financial support for companies in the event of a cyber incident. Thus, for example, in comments at the quarterly meeting of the Federal Advisory Committee on Insurance held on February 10, 2015, Deputy Secretary of Treasury Sarah Bloom Raskin spoke about the challenges and opportunities to the cyber insurance market, and the commitment of FIO to encouraging the growth of a robust cyber insurance market. Deputy Secretary Raskin voiced concern as to why smaller and mid-size companies where lagging behind larger companies in the purchase of cyber insurance, and expressed interest in identifying ways to help companies identify their specific cyber risks and the specific cyber insurance product that best suits them. One particular issue of interest as demonstrated both by statements such as Deputy Secretary Raskin’s and by recent proposed federal legislation is the goal of bolstering information-sharing with respect to cyber events. Accordingly, the FIO is actively seeking information on ways to further enhance the cyber insurance market particularly with respect to furthering the understanding of the frequency and magnitude of cybercrime events. Therefore, a key focus of federal and state agencies as well as other industry participants considering the issues is to facilitate the sharing of information on cyber attacks, which in turn will help companies identify cyber risks and insurers establish underwriting guidelines. Such guidelines would not only help insurers underwrite more affordable and comprehensible policies, but would educate potential insureds on how to better protect against cyberattacks, initiating a positive feedback loop that could further streamline the process and build a more robust cybersecurity insurance industry. Thus far, reports indicate that the FIO is actively working on the collection of data to enhance underwriting standards, and numerous states such as New York have indicated that they too will be working to help collect information to facilitate the process. Please click here, for a transcript of Superintendent Lawsky’s speech regarding New York’s efforts to enhance the industry.
For additional information on the cyber insurance industry from our live coverage of the 2014 Spring NAIC National Meeting, please click here.