As almost every conventional policy is exposed to cyber risks, the silent cyber exposure is potentially significant. With cyber threats increasing and prevailing ambiguities in traditional coverages, a need for further clarification exists. The insurance product landscape should therefore jointly addresses the insureds’ need for cyber coverage and clearly define what is covered and what is not in existing policies.

Katja Weber, responsible for Underwriting Strategies & Quality in Non-Life, illustrates “removing ambiguities and adequately considering cyber within a clearly defined risk appetite involves two steps in our view: First, it needs to be decided to which line of business the cyber exposure belongs to, either in the cyber line or as a covered peril in the traditional lines. Secondly, the cyber exposure that remains within the traditional lines needs to be adequately addressed. This means the exposure has to be considered in wordings, risk assessment, pricing and accumulation control“.

As there is currently only limited silent cyber claims data available a possible solution to assess the exposure in the traditional lines could be  exploring loss scenarios. Munich Re has analysed a variety of illustrative Property and Casualty cases to determine how cyber risks could affect traditional policies.

Munich Re has the ambition to actively support its clients with regard to cyber and silent cyber. As Stefan Golling points out, “we want to contribute to the cyber challenge being seen less as an obstacle and more as an opportunity for sustainable new business throughout the industry as a whole. Our approach is based on understanding risks, assessing them adequately and thus making them insurable. When talking about Munich Re as a leading global cyber solution provider, he adds, “this can only be done in close cooperation with experts from our insurance clients, our insureds and external partners from the cyber ecosystem, in order to develop a common understanding of how cyber risks should be dealt with.” In addition to risk transfer, this also includes risk management services and security measures. “To this end, we deploy our global cyber teams and rely on a network of renowned external partners to complement our own knowledge and range of services”.

“Reducing the surprises and bringing sustainability to the underwriting process as well as continuous market and trend surveillance should all be aspects of a comprehensive cyber strategy including silent cyber” explains Katja Weber. “The execution will be a marathon, not a sprint. Together with our clients we will continually evolve in order to ensure an adequate insurability of cyber and to leverage the growth potential”.