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2020 New Zealand Insurance Market Recap Series - Cyber
Cyber incidents continued to dominate global news headlines throughout 2020, with ransomware attacks becoming more frequent. According to the Global Risks Report, published by the World Economic Forum with the support of Marsh & McLennan, more than 50% of the world’s population is now online, approximately one million people go online for the first time each day, and two-thirds of the world’s population own a mobile device. Given the lack of a global technology governance framework and cyber insecurity, these trends translate to an increased risk for organisations.
The New Zealand cyber insurance market remains more favourable to buyers than other classes of insurance. However, the market is quickly changing and insurers are displaying increased caution compared to prior years.
Based on communications with cyber insurance markets, both overseas and in New Zealand, there is evidence of cyber losses becoming both more severe and more frequent from a claims perspective. These conditions, coupled with wider insurance profitability issues surrounding COVID-19, will have an impact on the cyber insurance market in 2021 and beyond.
The cyber market for new policies is beginning to firm compared to previous years, with less capacity available and limited appetite for businesses procuring cyber cover for the first time.
The cyber underwriting process is becoming more complex and stringent, with underwriters wanting to understand risk management controls and processes in finer detail. Buyers should expect a range of more rigorous underwriting questions. Given these market trends and conditions, existing cyber insurance policyholders should be prepared to negotiate their terms at renewal with insurers to ensure the best possible outcome.
The regulatory changes expected to arise from the Privacy Act, which took effect on 1 December 2020, will also change the legislative landscape in New Zealand and potentially increase the overall liability exposures from cyber incidents.
NOTE: This Cyber report is a part of the 2020 New Zealand Insurance Market Recap Series – a series of local market insights by insurance class, with a specific focus on the state of market in New Zealand. Other insurance classes featured in the series include:
Jonathan Soo
Jono offers in-house expertise in this growing risk area of Cyber. He has come from a background in liability insurance working with professional services firms and both public and private enterprises across New Zealand. In recent years, Jono has handled various Cyber placements and keeps up-to-date on the rapidly evolving cyber threat landscape, understanding how quickly this risk area can change. As a specialist Cyber head, Jono is responsible for providing specialist placement and risk management advice to clients that address their key cyber exposures. He has strong relationships with a range of local insurance carriers and works closely with them to continuously develop enhanced offerings for Marsh clients. Jono regularly contributes to developing thought leadership material, to educate both clients and colleagues to better understand cyber risk.