As we know, Lloyd's has begun addressing the issue of “silent cyber”. In July last year, it issued a market bulletin calling for specific exclusions or affirmative (re)insurance to provide transparency. This was in response to a concern that underwriters were taking on board cyber losses without really understanding their full risk and that customers, brokers and syndicates would all benefit from clarity as to whether coverage is provided for losses caused by a cyber event.
According to the 4 July 2019 bulletin, “Lloyd's believes that the market should now adopt best practice for all policies. Lloyd's is mandating that all policies provide clarity regarding cyber coverage by either excluding or providing affirmative coverage. To support the market in making the necessary changes this requirement will be implemented using a phased approach.”
As from 1 January this year, Lloyd's underwriters on first-party property damage policies are now required to follow this mandate. In late January, Lloyd's clarified timing of the phased roll-out for other lines of business, with a series of implementation dates running over 12 months from 1 July. Head of underwriting, Caroline Dunn has confirmed that the next phase will involve a small number of direct classes, including accident & health and political risks.
The vast majority of third-party liability lines, including general liability and financial and professional risks, will follow in the third phase of the roll-out from 1 January 2021.