InView Autumn/Winter 2015

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6 InView | An independent eye on insurance How is the insurance sector dealing with cyber risks? So far insurers have competed by shoehorning as many risks as they can think of into cyber policies, resulting in wide-ranging exposure that often clashes with other types of insurance and providing more than buyers want or need. Customer requirements by contrast are increasingly for more sophisticated and specialised cover. For example, a manufacturer could lose valuable R&D work to a hacker. This calls for a policy offering cover for business interruption, loss of profit and legal expenses to assist with recovery and prevent copyright infringement. By contrast, a corporate service provider will be far more interested in cover for theft of client money. In short, cyber policies must evolve to meet the specific threats that individual customers face if they are to deliver real value. The cyber threat and the global economy The UK government has developed the Cyber Essentials scheme as a basic cyber “hygiene” standard but it is not enough. Ministers also need to do more to educate the public about cyber risks and how they impact on us all. In a stark warning across the pond, Barack Obama has spoken of a cyber attack on America’s infrastructure having the potential to be more devastating than conventional terrorism. In short, cyber policies must evolve to meet the specific threats that individual customers face if they are to deliver real value. Key developments in the UK market The cyber risk insurance market has seen significant premium generation, albeit largely from the USA where an estimated $5 billion has been paid in premiums to date. This is due to the regulatory position, which requires mandatory notification of data breaches, something not currently a requirement in the UK. But this will change in 2017 when the EU General Data Protection Regulation is expected to come into force. With this shakeup looming, UK demand for cyber risk insurance is bound to rise. However, capitalising on that demand requires effort and insurers must not sit back. The cyber landscape is vast – breaking it down into sectors so that individuals and businesses can understand their risk profile is important. Not only will it increase awareness but likely determine from whom cover is bought. Far better programmes of education and training are therefore needed, albeit with much greater focus on specific customer needs. Get this right and policy sales will soar. But whilst terrorism grabs the headlines, theft is a much bigger problem, costing Western economies billions of dollars every year. Increasingly, countries with developing economies and fewer protections against copyright infringement are stealing IP from Western manufacturers to bridge gaps in R&D that would otherwise take years and significant investment to achieve. This enables products to be replicated and brought to market at a much lower price, luring buyers away from traditional suppliers and adversely impacting the GDP of countries in Europe and North America. As productivity reduces, so do levels of employment, triggering economic decline. Looking ahead then, serious consequences are inevitable unless the UK and other governments collaborate to combat the proliferation of cyber crime. Even then, cyber threats are unlikely to be eliminated. The insurance sector therefore has a vital role to play in helping to ensure that businesses are able to stay competitive, both at home and abroad, and that personal assets are protected. © Copyright. Weightmans 2015. All rights reserved.
Issue 2 | Autumn/Winter 2015 7 RECENT DEVELOPMENTS IN THE LAW OF CONFIDENTIALITY Since the introduction of the Human Rights Act 1998, and in a rather haphazard fashion, English law has developed a partial law of privacy, based upon the rights of individuals under Article 8 of the European Convention to respect for their private and family life. Charles Phipps from 4 New Square Chambers explains how the new cause of action for misuse of private information has seen significant developments during the course of 2015.
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InView Autumn/Winter 2015

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