Silent risks undermine insurers’ cyber exposure efforts, says Fitch

Despite underwriters being increasingly aware of the potential exposures presented by silent cyber risks it remains a very real and urgent threat, which analysts at Fitch Ratings say is key to understanding, and therefore the effective management of the evolving cyber risk landscape.

In a recent report, analysts at Fitch Ratings note that while property and casualty (P&C) insurers are increasingly sophisticated in the measuring of cyber risk aggregations and modelling potential losses from cyber cat events, the efficacy of this analysis is hindered by exposure to silent cyber risks.

Non-affirmative, or silent cyber risks exists when insurance policies fail to explicitly address cyber-related coverage terms or specifically exclude cyber risks.

“This ambiguity in coverage can lead to disputes and litigation following a cyber event when insureds seek funds from available policy limits for protection; it also poses risk of reputational damage to insurers,” explains the ratings agency.

Increasingly, underwriters are gaining an improved awareness of the potential exposures posed by non-affirmative cyber risks, but Fitch notes that any remedial actions are moving at a varying…