Only 1% of captives cover cyber risk
Only a tiny proportion of captives are covering cyber risks despite this threat being high up the agenda of cyber directors, a study by Aon has shown.
According to Aon’s 2014 Captive Benchmarking study which covers more than 1,000 managed captive clients, only one percent of captive owners currently write cyber – a figure that has remained static since 2012.
Aon said this is surprising given that in a separate survey earlier this year 83 percent of captive directors felt that the threat of cyber risk was severely underrated.
Vincent Barrett, managing director of Aon Captive & Insurance Management, said: “With the increasing risk of cyber-attacks we were surprised that such a looming and potential source of liability was only being written into a captive by 1 percent of captive owners.
“The reluctance for many organisations appears to derive from the challenge of estimating cyber risk exposure and understanding the consequences of cyber events – a challenge equally reflected in the reluctance or companies to purchase cyber insurance. Our benchmarking tool enables us to understand the key risks that are being written by captive owners and can help us to counsel and guide on future and emerging risks which may not have been considered.”
Sarah Stephens, EMEA Practice Leader – Cyber at Aon, added: “Recent high profile cyber losses show that this is an increasingly pervasive business risk and should be taken seriously by the board.
“Captive owners should seriously consider the benefits of involving the captive in the process of gaining clarity around cyber risks. Many businesses don’t feel confident enough in their cyber risk profile to expose themselves to insurer scrutiny, which is one big reason that a captive can be the perfect place for a company’s cyber risk management to mature.”