Commercial lines insurers are increasingly afraid of so-called “silent cyber” risk exposure within their broader book of business

Liability or property policies exposed to cyber losses are a source of increasing fear among insurers, according to a Willis Re poll of insurers. 

So-called “silent cyber” exposure – not underwritten with such claims in mind, as opposed to standalone cyber or other specifically designed covers – is perceived as a growing risk by around half of insurers, reported the reinsurance broker.

Around half of respondents to Willis Re’s “Silent cyber risk outlook” felt the risk of a silent cyber loss from property or other liability was greater than one-in-100.

Close to a quarter considered the risk to be greater than one-in-ten, which Willis Re said illustrated the degree of uncertainty surrounding potential exposure.

Respondents were asked to assess the extent to which, over the next 12 months, the cyber aspect of exposure would increase the likelihood of a covered loss.

Examples of potential silent cyber exposure cited by Willis Re included a cyber-attack on an industrial plant’s control system causing a boiler explosion, leading to extensive property damage and business interruption, or malware causing an elevator to fail, resulting in multiple casualties.

The most at risk sectors, according to respondents’ risk perceptions, were IT, telecom, utilities and financial services firms.

While a policy pay-out would depend on the specifics of individual wordings and occurrences, the reinsurance broker said such examples illustrated how silent cyber events can push up loss rations on policies not specifically meant to cover cyber risk.

Willis Towers Watson head of global cyber risk Anthony Dagostino said: “Buyers of insurance have to consider the exposure that they have in relation to the rising prominence of cyber-related incidents.

“The results of the survey have reinforced the need for a holistic cyber risk insurance strategy and tailored insurance policies to address the risk adequately,” said Dagostino.

Willis Re global cyber practice leader Mark Synnott said: “The degree of concern over silent cyber exposure has confirmed the importance of the existing support we are giving to clients to help them better manage their known and unknown cyber exposures.”