U.K. insurers will not be covering as much digital property and data as they previously did, according to the Financial Times.
Now, disasters like fires in data centers and IT meltdowns will not be covered under policies that help corporate headquarters and buildings in cases of damage.
That is leaving many companies potentially exposed. Regulators are asking insurers to clarify their policies so companies can know what exactly what will and will not be covered. They may have to get separate cyber insurance policies.
Sarah Stephens, cyber, media and technology practice leader at insurance broker Marsh TLC, said insurers are “choosing to exclude anything connected with technology,” and said clients were concerned.
But pressure has come from agencies like the U.K.’s Prudential Regulation Authority and Lloyd’s of London, who want to know what can be covered. One case that highlighted the confusion and overall issue was that of confectionary company Mondelez, which sued insurance company Zurich for refusing to cover damages of $100 million after Mondelez’s laptops and servers suffered a cyberattack in 2017.
Companies said fear they’ll be left without adequate coverage in future, similar incidents. They said the insurance agencies have made it clear they don’t want to cover technology-related risks.
Rob Smart, a technical director at consultancy Mactavish, decried the “fairly draconian wording” on the changes, saying they could result in much more sweeping denials than the insurers intended.
And the issue with purchasing separate cyber insurance is that the market for it is still pretty small, and many firms don’t offer the scope of insurance that companies need. Stephens said, for example, clients who want $1 billion in coverage are only getting $500 to $800 million in coverage. The challenges come from how new the field is.
But the field is steadily growing. A U.S. company, Vouch Insurance, is expanding and offering coverage for tech companies for a range of things from general liability, management liability, cybercrime and more, starting at a few hundred dollars a year.
The field of tech insurance is expected to reach $7.5 billion by the end of this year, and $15 billion by 2022, and it is seen as a rare opportunity for growth by insurance companies.