Stand-alone cyberinsurance is a critical component of enterprise risk management. But even companies with traditional and cyber coverage may, and usually do, have gaps in coverage created by what I’ve referred to as the ‘hot potato’ problem. This is when neither the cyber policy nor the relevant traditional coverage is truly designed for a relatively new kind of risk.
One example is physical damage caused by cyber events. Particularly as the Internet of Things increases the connectivity of physical devices, cyber attacks can hurt people and property. Cyberinsurance likely covers network security failures and unauthorized access to these devices, but ‘standard’ cyber policies typically exclude coverage when these events result in physical damage. And property and casualty policies that would otherwise cover physical harm generally exclude damages arising out of cyber events. Rock, meet hard place.
Gap, meet AIG’s Cyber Edge products. These products are designed to fill this gap by, in addition to covering the relatively standard range of cyber risks, including the ability to add coverage for cyber events that cause physical damage to people or property.