The cyber insurance market has been a challenging and ever-changing landscape in recent years, with huge rate increases, coverage restrictions, and evolving risks. Nadia Hoyte, cyber national practice leader at USI Insurance Services, discusses three trends that she believes will shape the cyber insurance market in the coming years.
Firstly, privacy litigation and regulations are becoming increasingly complex, leading to an increase in cyber insurance claims. As state and federal regulations on data privacy become more stringent, businesses are facing higher risks and potential legal consequences. This trend is expected to continue, with large jury awards and settlements putting pressure on insurance carriers. Hoyte predicts a “shakeout” in this area as companies grapple with the challenges of navigating the evolving regulatory landscape.
Secondly, vulnerability among third-party vendors is a growing concern in the cyber insurance market. Cybersecurity measures will need to focus on strengthening companies’ systems against vulnerabilities arising from their relationships with third-party vendors. Hoyte highlights the risk of a single vendor experiencing a cyber event that can have a cascading effect on their customers and their customers’ customers. This “cyber hurricane” scenario is an area of concern for insurers and something that companies will need to address to mitigate their cyber risk.
Lastly, the adoption of artificial intelligence (AI) is raising issues of data ownership and privacy. As AI technology becomes more prevalent, there will be increased scrutiny and regulatory actions around its use. Hoyte suggests that the US, in particular, will catch up quickly in terms of regulating AI, as it has been somewhat lagging behind the EU and China in this area. The growing reliance on AI in various industries necessitates a careful examination of data ownership and privacy rights.
Hoyte, who has over two decades of experience in the insurance industry, has witnessed the evolution of the cyber insurance market from its early stages. She emphasizes her passion for the innovation and excitement in the field, describing it as a “repository for my endless curiosity.” Hoyte sees herself and others in the cyber insurance industry as pioneers, exploring new frontiers and addressing the ever-evolving challenges of cyber risk.
Overall, the cyber insurance market is dynamic and constantly evolving. Insurers and businesses will need to stay ahead of the curve and adapt to emerging risks and regulations. Privacy litigation, third-party vulnerabilities, and AI are just a few of the trends that will shape the future of cyber insurance. Navigating this perplexing market requires expertise and a proactive approach to managing cyber risk.