Silent cyber: Can you hear it?

With events such as the WannaCry ransomware attack, classified as a cyber catastrophe event, silent cyber issues have developed into coverage disputes.

Because cyber risk is now a pervasive threat to all operating entities, it impacts practically every line of commercial insurance.

Yet, it remains unaddressed in many lines of insurance. The lack of clarity in some standard property and casualty policies can lead to confusion or misunderstanding about coverage for cyber risks.

Simultaneously, an insurer covering a loss it had not contemplated can jeopardise its credit rating and/or financial solvency. We refer to these potential cyber exposures as ‘silent’ cyber or ‘non-affirmative’ cyber.

Lyndsey Bauer, Partner at specialist insurance broker Paragon, provides an overview of silent cyber and the responses that insureds should take going forward, writing in a new white paper.

The white paper, available in full on the Airmic website, leads with an overview of the current environment, including policy options for buyers, as well as potential arguments for insurers denying cover.

The document then describes the market response to silent cyber, including exclusions on directors’ and officers’ liability and on and crime insurance products, property and marine affirmative covers, standalone cyber policies, providing options for insurance buyers.  

Bauer concluded:

“Insurers and regulators are taking action to address the risk of silent cyber. Policy language is evolving and that is impacting coverage. Besides being untested, the drafted language could also overreach.

“Policyholders face the challenges of getting inconsistent responses from their insurers, inadvertent loss of intended coverage and programme gaps.

“Finally, insureds should prepare for renewal – they should develop a strategy, identify renewal priorities, approach the market with C-suite support and always review feedback.”

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Notes to Editors:

About Airmic

The leading UK association for everyone who has a responsibility for risk management and insurance for their organisation, Airmic has over 450 corporate members and more than 1,300 individual members. Individual members include company secretaries, finance directors, internal auditors, as well as risk and insurance professionals from all sectors. Airmic supports members through training and research; sharing information; a diverse programme of events; encouraging good practice; and lobbying on subjects that directly affect our members. Above all, we provide a platform for professionals to stay in touch, to communicate with each other and to share ideas and information.

About Paragon

Paragon’s industry leading Cyber practice, which has a wealth of technical and broking experience, places some of the largest and most complex cyber, technology and media programmes globally. They develop proprietary products and partner with recognised legal and IT specialists to offer risk identification and risk management services to a  worldwide client base, from ‘’start-ups’’ through to multinational businesses.

Paragon is a specialist insurance broker, operating in the Lloyd’s of London, UK, Bermuda, European and International Specialty markets. They have market leading capabilities and experience in the Financial, Professional and Casualty Lines sectors. For more information, please visit: www.paragonbrokers.com