While a growing number of companies are using their captives to transfer cyber risk, some of the most innovative are also exploring the possibility of insuring reputational risk, according to Jason Flaxbeard, executive managing director, captive management and consulting, Beecher Carlson.
Flaxbeard was speaking to Captive International at the annual Bermuda Captive Conference taking place this week. He said cyber coverage is typically being split between expected liabilities, such as fines, penalties and credit monitoring, and unexpected risks generated by cyber.
While the latter are much harder to measure and price, some captive owners are looking at whether they can bolt on reputational risk to their cyber policy within their captives. Many risk managers see reputational risk as one of the biggest threats facing their organisations, but it is very difficult to cover this risk using insurance.
Flaxbeard said that such a policy would act as more of a financing play to help fund some of the processes and procedures that need to happen in the event of a crisis. “A number of companies are looking at whether this is something that could be bolted onto cyber,” he said. “I think the industry will increasingly understand that this is a risk they need to look at, as is intellectual property risk, though there are no moves to attempt to cover that in a captive at the moment.”
Coverage for reputational risk is starting to become available, he said. The likes of Steel City Re will offer this liability and such a policy could in theory be acquired via a captive.
Cyber. Jason Flaxbeard, Beecher Carlson, Bermuda