The phrase “cyber insurance” will quickly become outdated, a Bermudian underwriter has told Insurance Day, the British-based specialty online publication.

Donavan Burgess is a senior vice-president and digital assets, cyber and professional lines underwriter at Relm Insurance.

The direct writer, licensed since December 2019, provides coverage for companies operating in new and emerging business sectors, including crypto, web3, cannabis and alternative therapeutics, among others.

The wide-ranging Insurance Day article, headlined “Disruptive sectors will force the evolution of cyber insurance”, was written by London-based online editor Louise Isted.

Excerpts include:

Mr Burgess said: “As the world rapidly evolves and technology becomes deeply ingrained in every facet of society, I believe we will outgrow the catch-all phrase of ‘cyber insurance’.

“Instead, we will need to shift our focus toward understanding and addressing the more specific and granular aspects of technology-related risks.”

Mr Burgess added: “Offering a standard cyber policy to a digital asset company heavily involved in block chain technology, for example, requires a fresh approach to assessing and perceiving cyber risk.

“When we delve into decentralised technologies where ownership and privacy conventions differ from centralised systems, it becomes clear our traditional perceptions of cyber risk may not align with this new reality.

“I see us approaching an inflection point where our understanding of what a cyber insurance policy aims to achieve will be significantly challenged.

“We will need to rethink how we offer tailored solutions to address the next generation of risks and effectively provide value to our clients.

“By adapting this approach and staying ahead of evolving technologies, we can ensure our risk-transfer solutions align with the unique needs and complexities of the digital landscape.”

Mr Burgess said clients from emerging sectors must navigate a risk landscape that is significantly broader in scope than traditional cyber insurance caters for.

He told Insurance Day: “They must effectively manage the risks posed by traditional technology environments encompassing e-mail security, cloud security, device security, client data management, contractual obligations and navigating complex regulatory frameworks.

“Additionally, they face a unique set of next-generation risks arising from the innovative technologies they employ, particularly within the blockchain domain.

“For example, these next-generation risks introduce a myriad of potential exploit points for malicious actors, requiring a distinct and formidable approach to navigation and management.

“Consequently, while our clients may possess advanced capabilities, their exposure surface and risk landscape far surpass those typically associated with traditional risks.

“As these technologies are still in their infancy, they present new avenues for potential exploitation. Over the past two years, we have observed an intensified focus from malicious actors seeking to capitalise on these opportunities for greater and more efficient rewards.”

He added: “The technology is evolving rapidly and vulnerabilities are more prevalent. This creates an environment where bad actors can potentially exert less effort while reaping greater rewards.

“Consequently, we are witnessing a notable shift in the preferences of malicious actors toward exploring new vulnerabilities and exploiting the potential rewards offered by this next generation technology.”

When assessing growth in the cyber insurance industry, it is crucial to consider the “macro trend” of technology adoption, he told Insurance Day.

“Companies are increasingly leveraging technology to drive operational efficiency and revenue growth. However, with each adoption of technology into the equation also brings forth new cyber-risks, necessitating the need for new and growing cyber-risk opportunities.

“Additionally, we witness the emergence of new industries aiming to disrupt existing norms, leading to a continuous demand for cyber insurance tailored to their novel cyber-risk transfer requirements.”

He added: “As technology continues to evolve, this cycle of companies seeking new forms of cyber insurance will persist.

“Furthermore, regulatory bodies are taking assertive measures to address the far-reaching impact of cyber threats on both companies and the economy as a whole.

“This proactive stance will continue to stimulate growth in the cyber insurance industry.”