Lloyd’s of London is receiving a lot of reaction over its new cyber policies containing exclusions from state-backed attacks.
The Bank of America voiced its concerns over the most recent by the insurance company. The BOA stated that many financial institutions are concerned. They have no protection against major cyber intrusions.
The bank’s senior vice president of operational risk and cybersecurity, Paul Benda, said any changes to cyber policies were troubling to banks that are already under one of the stringent regulations.
He added that the US banking industry takes cybersecurity (which includes an approach to managing operational and cyber-risk insurance) seriously and that any sudden changes to existing policies will cause alarm.
Understanding the Motives
While stating that it “remains strongly supportive of the writing of cyberattack cover” in a market bulletin released on August 16, 2022, Lloyd’s also acknowledged that “cyber-related business continues to be an evolving risk.”
In order to comply with a number of regulations, the firm mandated that all of its insurer groups adopt a relevant clause. The clause excludes liability for losses caused by any state-backed hack. The action reflects how rapidly the cyber insurance market is developing.
As per the writeup, the insurance company stated that underwriters must include the likelihood that state-backed attacks may take place outside of a conflict involving physical force when calculating cyberattack risks. Similar systemic risks exist for insurers due to the potential harm that these attacks can do and their propensity to spread.
It claimed the latest move was to protect itself from risks that may arise from cyberattacks on its clients.
What is Lloyd’s of London?
Lloyd’s of London or Lloyd’s is a marketplace for insurance and reinsurance. Its members work together as syndicates to offer insurance protection to companies, groups, and people. The syndicates specialize in various types of hazards and selects the risks they will insure.