Cyber insurance and directors and officers (D&O) liability insurance go hand in hand now that company business models increasingly revolve around technology, according to a white paper published by Airmic with support from Marsh and AIG
London, UK (Nov. 30, 2018) – Cyber incidents are dramatically on the rise, with AIG reporting as many cyber claims in 2017 as in the previous four years combined. There has been another significant jump so far in 2018, even before the impact of the General Data Protection Regulation (GDPR).
“The risk of cyber-attack is a constantly evolving threat, and, for most companies there is a recognition that it is not a case of ‘if’ but ‘when’ their organisation will be impacted,” says the report.
It points out that there have already been several high-profile shareholder class actions resulting from cyber incidents, a scenario that puts companies’ D&O policies under the spotlight. It urges boards to “take a proactive approach to their insurance arrangements, ensuring that individuals and the company have adequate cover in the event of a cyber incident where a company and its senior management may face regulatory investigations or shareholder litigation.”
The white paper’s author, Senior Management Liability Specialist at Marsh Eleni Petros, said insurers may now be looking more closely at companies’ cyber-security arrangements when underwriting a D&O risk.
“Apart from being best practice risk management, it is clearly going to make buying D&O insurance easier if you have done all you can to ensure that your technology is robust,” she said. “As the potential for D&O claims arising from technology failure continues to increase, the quality of your cyber risk management framework will determine how attractive you are to potential D&O insurers.”
Noona Barlow, Head of International Financial Lines Claims, AIG said: “We’re delighted to have been involved in putting together this report, which has highlighted how having both the right D&O and cyber cover and claims response is essential given the inter-connectivity of the two exposures. It’s clear that when buying D&O insurance the risk manager needs to take into account the almost-certainty that a cyber incident will impact the company at some point, and ensure senior management is aware of the importance of a robust cyber-security framework and effective insurance.”
“As our white paper points out, it is increasingly difficult to separate out cyber-related insurance from other types of risk such as D&O because technology has become so embedded in company business models,” said Airmic technical director and deputy CEO Julia Graham. “It is also a great illustration of how good risk management and insurance purchase are two sides of the same coin.”
White Paper: Understanding cyber Directors & Officers liability risks and buying insurance
The guide to understanding Directors & Officers Liability risks and buying insurance was published in 2018 by Airmic in association with AIG and Marsh. The guide was designed to help risk managers and the leadership of their organisations navigate these liabilities in an environment of increasingly complex and connected risks.
Airmic is delivering a series of ‘Academy Days’ focusing on specific areas of risk. The objective of the Academy Days is to provide thought leadership and an opportunity for risk managers to discuss and debate managing risk with their peers. Each Academy Day will be supported by a paper exploring Directors & Officers Liability risks and insurance in the context of the Academy Day subject.
Read more or download the white paper.
About Airmic
Airmic is the association for everyone who has a responsibility for risk management and insurance for their organisation. Members include company secretaries, finance directors, internal auditors as well as risk and insurance managers. We support our members in a range of ways:
- Through training and research;
- By sharing information;
- Through our diverse special programme of events;
- By encouraging best practise;
- By lobbying on subjects that directly affect risk managers and insurance buyers.
Above all, we provide a platform for professionals to stay in touch, to communicate with each other and share ideas and information. The more people who take part in our activities, the more valuable we become. For more information, visit www.airmic.com.
About Marsh
Marsh is a global leader in insurance broking and innovative risk management solutions. Marsh’s 30,000 colleagues advise individual and commercial clients of all sizes in more than 130 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With annual revenue over US$14 billion and nearly 65,000 colleagues worldwide, MMC helps clients navigate an increasingly dynamic and complex environment through four market-leading firms. In addition to Marsh, MMC is the parent company of Guy Carpenter, Mercer, and Oliver Wyman.
About AIG
American International Group, Inc. (AIG) is a leading global insurance organization. Founded in 1919, today AIG member companies provide a wide range of property casualty insurance, life insurance, retirement products, and other financial services to customers in more than 80 countries and jurisdictions. These diverse offerings include products and services that help businesses and individuals protect their assets, manage risks and provide for retirement security. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange.
For additional information, please visit www.aig.com/travel. Additional information about AIG can be found at www.aig.com.
AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at www.aig.com. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries, and coverage is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.
Source: Airmic
