Cyber risk analytics firm reports an increase in activity by threat actors and their affiliated hacktivist groups since the outbreak of war in the Middle East, including distributed denial-of-service attacks, phishing campaigns and attempts to disrupt corporate networks and critical infrastructure, according to S&P Global Ratings.
With this in mind, the rating agency said that as observed in previous geopolitical conflicts, there is a higher risk of serious cyberattacks during or after military operations.
“To date, there have been no public reports of large cyber insurance-related losses directly attributable to the war in the Middle East. Most incidents appear to have disrupted services or systems but resulted in no significant insured losses,” S&P explained.
However, the ratings agency noted that while the impact of the war on insurers’ cyber portfolios currently appears limited, the situation remains volatile and could escalate further, particularly once the physical conflict subsides.
S&P continues: “Escalation of malicious cyber activity into larger-scale, coordinated, nation-related attacks could severely test underwriting models, increase cumulative risk, and trigger legal disputes over underwriting.
“That said, insurers have been refining their cyber policy wording over the past few years, particularly around war-related exclusions and state-sponsored cyber activities, to clarify coverage.
“At the same time, underwriting frameworks are increasingly incorporating cyber risk analysis, threat intelligence and geopolitical risk assessments to better understand systemic risk.”
The ratings agency also highlighted significant gaps in cyber insurance protection, noting that despite growing digital dependence, many companies remain uninsured or underinsured against cyber risks.
S&P added: “Rising geopolitical tensions and growing awareness of cyberattacks are likely to further increase demand for cyber insurance. In addition to traditional insurance solutions, alternative risk transfer mechanisms and public-private partnerships are likely to play an important role in gradually closing the protection gap.”
Manuel Adam, credit analyst at S&P Global Ratings, continued: “Our focus remains on insurers’ risk management practices, portfolio diversification and operational resilience.
“Overall, the wars in the Middle East have highlighted the growing links between cyber risk, geopolitics and insurance, reinforcing the importance of clear policy language, prudent underwriting and strong operational safeguards to maintain portfolio resilience.”
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