Insurers told to act on cyber insurance policy confusion
A lack of standard terminology in cyber insurance policies causes confusion for brokers and customers, and is a ultimately stifling market growth, the CEO of cyber insurance comparison engine Cyber|Decider has warned.
While demand for cyber insurance is growing, there is much confusion about the policies available and the terms of cover because insurers fail to use standard wordings. For instance, what one calls ‘network expenditure’, another terms ‘data restoration costs’; in some policies the definition of 'computer' also includes ‘industrial control systems’, in others it does not, the founder said.
Across all other insurance lines, whether commercial or personal, underwriters use standard terms to be clear and concise about the terms of cover available. But insurers offering cyber cover have been reluctant to use standard wordings because of misinformed concerns that sharing an agreed standard policy is anti-competitive and illegal.
Neil Hare-Brown, CEO of Cyber|Decider, said: “Clients are missing out on getting the right cover because cyber insurance is an area that causes brokers confusion and insurers have done little to rectify that. When you combine confusing policy wording with the tech-jargon around cybersecurity, you are creating an off-putting combination for many brokers.
“Lawyers have scared insurers into believing that it is anti-competitive for them to discuss creating standard terminology for cyber insurance, although it is the norm for all other policy areas. However, there is nothing stopping Cyber|Decider using our position to propose sensible standard terms and for insurers to adopt them, and that is what we are doing.
“The off-putting and confusing language used in such policies is a barrier both brokers and clients, and it is essential that underwriters are aware of the extent to which the current complicated and often contradictory wordings are stifling market growth.”
He added: “The upshot of the current situation is that many brokers will only offer customers a blanket policy, whether that is right or wrong for the customer’s specific needs. It means fewer policies are sold and clients are badly served.
“It is time to break this barrier. Cyber|Decider is calling on the insurance market to use forums, including the Cyber Insurance Association, to discuss solutions to this growing problem and open the market up to new customers.”
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