Warren Buffett and Berkshire Hathaway's top insurance executive Ajit Jain recently warned of the potential for"huge losses" in cybersecurity insurance in annual meeting comments.
"There's no place where that kind of a dilemma enters into more than cyber," Buffett said."You may get an aggregation of risks that you never dreamt of, and maybe worse than some earthquake happening someplace."Industry analysts generally say while some of Berkshire's caution is warranted, the general state of the cybersecurity insurance marketplace is stabilizing as it becomes profitable. And Gerald Glombicki, a senior director in Fitch Rating's U.S.
Any government involvement"will probably happen after a big, expensive cyber-incident," he said."After September 11, the government put together a terrorist risk program. In cyber, we have not yet seen an attack of that scale. We are still in the stage of thinking about possible approaches."While the number of cybersecurity policies being written is small now, analysts don't expect it to stay that way.
And more insurers are entering the market because they have the tools and data to price the risk. "If you can do it at sound rates, you will write that coverage," Friedlander said.Buffett and his top insurance lieutenant don't agree. It's the insurance"loss cost" — what the cost of goods sold could potentially be — that has Berkshire on the fence with a bigger move into cyber insurance.
"What they are trying to do is remain resilient and solvent in the event of a widespread event; what they have done to manage that is put in exclusions," Shokrai said, and those include critical infrastructure, cyber war, and other widespread disruptive events.
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