Bermuda well placed to be cyber risk insurance centre

By added on 26/03/2015

Bermuda could carve out a huge chunk of a new market for cyber insurance, experts said yesterday, reports the Royal Gazette.

They were speaking after the UK government issued a report on joint initiatives with the insurance sector to tackle cyber risk — and make the UK a world centre for cyber security insurance.

But KPMG Bermuda director Tom Kelly said that Bermuda was well-positioned to add the sector to its existing roster of risk.

Mr Kelly added: “With the ever-growing dialogue around the decline in property catastrophe pricing, cyber insurance would seem like a strong candidate for the next wave of risk management innovation that Bermuda could take a significant role in.”

But he said that capitalising on a new market would need Government, the insurance and reinsurance industries and the Bermuda Monetary Authority to work together to create “the right framework, incentives and skill sets to attract and appropriately manage this business”.

Mr Kelly said the UK report, “UK cyber security: the role of insurance and managing and mitigating the risk”, had three main themes — alerting companies to the threat of large-scale computer attacks, helping the insurance industry to establish cyber insurance as part of its armoury and establishing London as a global centre for cyber risk management.

He added: “With this document the British government has put out, they see a good opportunity for the London market to take the lead, but Bermuda has always worked very closely with the London market.”

And he said: “Maybe the dialogue has to get louder that Bermuda has capacity and as these risks emerge, Bermuda is a key place to absorb these risks.”

Mr Kelly added that cyber attacks could cripple major electricity networks or supermarkets chains — which could affect a number of jurisdictions.

And he warned: “It’s a global issue and it’s only in its infancy at this stage.”

KPMG IT expert Chris Eaton said that he had yesterday chaired a Chamber of Commerce business tech division briefing for the Chamber’s retail division at Butterfield Bank as a follow-up to a recent breach at a local retailer.

He added that there had been 80 million separate cyber incidents affecting the massive Microsoft Windows network in 2013 — and that was expected to more than double to 200 million this year.

Mr Eaton said: “That’s happened quite quickly — it’s growing exponentially at the moment to where we have this massive amount of malware out there.”

And he warned: “Cyber risk is one of the most significant issues facing all sectors of the economy today.

“This is no longer ‘script kiddies’ showcasing their skills to secure employment, but more typically well-organised, advanced, persistent threats monetising cyber crime, fraud and the theft of intellectual property.”