APAC cyber will find equilibrium long term but short-term softening of rates likely
September 25 2024 by Kristina Shperlik
Teck Siong Ng, cyber underwriter at Beazley, discusses the regional risk landscape and challenges presented by the lack of structured frameworks and emerging technologies like AI.
Across the Asia Pacific region, cyber preparedness is fragmented, from the maturity levels of the cyber market to the overall perception of the cyber risk, according to Teck Siong Ng, underwriter, cyber risks Asia at Beazley.
However, there is a shift in the mid-market, with the development of stringent privacy laws and cybersecurity regulations which is gradually reshaping many organisations’ relationships with cyber insurance in markets such as Hong Kong, Singapore, and Malaysia.
There is certainly increased risk appetite in Asia Pacific, which is indicative of the growing maturity of the cyber market and the industry’s confidence in the risk level, Ng said.
“The market will find its equilibrium in the long term and there will likely be a short-term softening of rates,” he said.
“The threats like ransomware and AI-enhanced attacks continue to disproportionately affect organisations that have not adequately invested in cyber security measures,” Ng said.
“While it may be perceived that some industries or business sizes are more exposed to this threat than others, the trend suggests that cybercriminals are targeting those companies which they consider ‘low-hanging fruit’, those with minimal security controls,” he explained.
“Risk selection will be a key component in profitability. More mature organisations recognise that the cyber landscape is dynamic and are therefore not always looking for the lowest rates for cyber solutions. They want a full spectrum offering with a dedicated resource on the ground in the region,” he added.
Overall, while companies may excel in prevention and detection, their incident response strategies often lack robustness.
“This shortfall can lead to amplified losses, encompassing data restoration and business infrastructure recovery, not to mention the reputational damage that can ensue. It’s clear that while cyber hygiene is improving, there is a pressing need for investment in incident response capabilities as this is just as critical as the preventative measures in place,” Ng said.
“We are seeing a shift in the mid-market, with the development of stringent privacy laws and cybersecurity regulations which is gradually reshaping many organisations’ relationships with cyber insurance in markets such as Hong Kong, Singapore, and Malaysia.” Teck Siong Ng, Beazley
There is a need for the industry to respond to the accumulation risks and prepare for systemic events like cyber war or outage of critical infrastructure.
Ng explained: “We are living in a world of accelerating cyber threats. While we don’t need to be fearful of this, we must be prepared, evolving our approach and offering and keeping clients ahead of the game.”
A comprehensive cyber proposition is a way to address loss prevention and provide ease of access to cybersecurity experts, and a holistic, full-spectrum strategy can help ensure that clients have a robust ecosystem of cybersecurity that pre-empts emerging cyber threats, responds to them and adapts to new risks in real-time, according to Ng.
The rise of generative AI is a key risk consideration for insurers as it is increasingly used for launching sophisticated cyber-attacks.
Another important challenge for clients in Asia is cyber risk quantification, which is often hindered by a lack of structured frameworks.
“This is an area where harnessing global expertise and working closely with the growing cyber broking community in the region comes in, providing invaluable insights, helping to bridge the gap in risk perception and insurance buying behaviour that currently exists between Asia and more mature markets,” Ng said.
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