A new report from the International Insurance Association (IUA), the representative body for insurance and reinsurers operating in the London market, urges the establishment of clear protocols related to the business interruption (BI) claims review process to benefit the cyber insurance market.
The agency explained that these claims often occur in complex situations where tower structures have been established, with multiple insurance companies providing multiple layers of coverage for large risks.
“An established framework covering issues such as expert appointment, fee sharing and information flow can bring greater consistency and efficiency to the process,” the report said.
The IUA’s new paper, “A Segmented Market Review of Network BI Towers: Why It’s Time to Rethink,” outlines how the layered structure of network towers currently creates some challenges for claims review. The paper, published jointly by the IUA and consultancy, tax and surety firm Baker Tilly, identifies growing interest in reform.
Joe Shaw, IUA Claims Director, commented: “Every organization within what is often a fairly complex insurance structure is trying to achieve the same goal, which is to resolve claims efficiently and fairly. However, a lack of coordination can inadvertently cause delays.
“Market agreement in tower policy wording gives all participants a clear understanding of what will happen if and when an incident occurs.”
The report also explains that “so-called ‘segmented market reviews'” can become fragmented by duplication of effort and other wasteful procedures.
The paper believes that compared with traditional insurance industries such as property and property, the cyber insurance industry is still relatively young, and mature protocols are still emerging. As the market grows, many claims handlers are gaining business interruption experience.
Ben Hobby, partner at Baker Tilly, added: “Business interruption is often cited as one of the most challenging aspects of the cyber claims process. We are therefore delighted to have worked with the IUA on this report, in which we share some of our thoughts and observations, based on our own claims experience, on what market protocols can include to help insurers and policyholders navigate the process smoothly.”
To build on the findings of the new report, the IUA has announced that it will convene market practitioners to consider potential solutions and practical next steps for the cyber insurance market over the coming months.
