Do cyber insurers need to use standard terminology?

Do cyber insurers need to use standard terminology? | Insurance Business Canada

Do cyber insurers need to use standard terminology?

Within cyber policies, differing terms for the same exposure can cause coverage confusion. Is it time for some standardization?

Mark Schulz -Vice-president and cyber liability product manager- Victor O. Schinnerer & Company

“No. The current cyber landscape is still evolving. As cyber coverage stabilizes, so will consistency with the terminology. The range of broker understanding of cyber policy language runs the gamut, which is clearly an issue for those who feel less comfortable talking cyber with their clients.

Where there is a knowledge gap, however, there is also an opportunity to educate and demystify. I see great potential to win business for those insurers that can make their cyber policies comprehensive yet easier to understand in order to support brokers as cyber subjectmatter experts.”

Bob Parisi -US cyber product leader -Marsh

“An agreed lexicon for frequently used terms – not forced, but encouraged – might dispel some misconceptions about cyber insurance and in theory make policies easier to compare.

But the problem isn’t so much the vocabulary of cyber insurance as it is the grammar. Even if we forced all insurers to adopt standard terminology, insurers would still find a way to differentiate how they offered the coverage, as every cyber insurance underwriter believes they have the one true way to underwrite cyber risk. Efforts might be better focused on aligning the format of cyber policies with more traditional P&C policies.”

John Farley- Managing director, cyber liability practice -Gallagher

“Clarity is in everyone’s best interests. On the surface, it seems mandating standard terminology would be a good idea. Many cyber carriers define terms in vastly different ways. So, as an insured moves from one carrier to another, policies may contain the same terms but have wildly different definitions, making it difficult to navigate the market and affecting the scope of coverage.

Unintended consequences could include more constricted coverage with no room for negotiation. Other complications occur as new exposures arise. Imposing standard terminology may limit the flexibility of carriers to evolve along with the threat.”