What the Hack? Brad Gow discusses the challenges of pricing and underwriting cybercrimes and ransomware

December 6, 2021

In the December edition of Contingencies, published by The American Academy of Actuaries, Brad Gow, Sompo International’s Global Cyber Insurance Product Leader joined other leading industry experts to discuss the challenges of pricing and underwriting cybercrimes and ransomware in today’s evolving global market.


“Companies should certainly be cognizant of threats and be actively planning how to improve their operational resilience,” said Mr. Gow, who noted the tests that cyber-risk issues can pose to actuaries. “From an actuarial perspective, the cyber line can be incredibly challenging … to price for all these different threats,” he said, noting that when carriers first started putting cyber-risk policies together, threats were far more limited 20 years ago. “If you’re pricing hurricane or earthquake risk, you’ve got hundreds, or thousands—or even tens of thousands—of data points to reference. With cyber, networks are so dynamic with new users and companies constantly reconfiguring their networks,” so it’s not as predictable, he said.


Mr. Gow went on to say that unlike natural disasters, cyberattacks don’t have geographical boundaries, with malware that can spread beyond borders once unleashed, and added that many carriers are involved in multiyear projects to try to model and aggregate risk to at least identify what the exposures are.


How the evolving cyber-risk insurance market moves forward is not entirely clear, but the experts agree: Cybercrime and ransomware have become a global concern for governments and businesses alike.


Read the full Contingencies article

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