Allianz Commercial advocates proactive risk strategies amid rising cyber insurance
Joy Agwunobi
As digital transformation accelerates, the looming threat of cyber incidents is becoming a critical challenge for businesses around the world. Recent findings from the Allianz Commercial Cyber Security Resilience Report for 2024 have highlighted a sharp rise in both the frequency and severity of cyber claims, particularly large-scale claims exceeding €1 million.
According to the report, these high-value claims rose by 14 per cent in just the first half of the year, while their overall severity increased by 17 percent . This escalating trend has prompted Allianz Commercial, the global line of Allianz Group that specialises in insuring mid-sized businesses, large enterprises, and specialised risks, to sound the alarm on the need for stronger cyber risk management strategies.
Mukondeleli Masiza, a Complex Claims Handler at Allianz Commercial, recently delivered key insights on the issue at the SNG Grant Thornton Cyber Security Awareness Summit held at The Radisson Blu Gautrain Hotel in Sandton. During her presentation, titled “Risk Transfer as a Tool in Cyber Risk Mitigation: Cushioning the Blow through Cyber Insurance,” Masiza emphasised the urgent need for businesses to adopt proactive approaches to tackling cyber risks, with a particular focus on the role of cyber insurance.
Masiza’s presentation revolved around three core pillars of cyber risk mitigation: early detection, swift action, and risk transfer solutions. She stressed the importance of employing advanced detection tools to automate and expedite crucial tasks like forensics and notification, which ultimately lead to better crisis management. “Early detection minimises financial and reputational impact by allowing for quicker isolation of impacted systems and data,” Masiza explained.
Allianz Commercial’s research indicates that companies using AI and automation in their cybersecurity frameworks are able to reduce the costs associated with data breaches by an average of $2 million.
The second critical aspect is swift action, which Masiza described as essential for stopping a cyber incident from escalating into a full-blown crisis. She recommended developing robust incident response plans and conducting regular drills to prepare teams to act decisively in the face of a breach. “Swift action following early detection can stop a cyber incident from escalating, facilitating faster recovery and restoration of normal operations,” she stated, reinforcing the necessity for businesses to remain agile in their response.
Central to Masiza’s message was the vital role that cyber insurance plays in shielding businesses from the financial blow of cyber incidents. “Cyber insurance provides financial coverage for various costs associated with data breaches, including IT forensic investigations, data recovery, and system restoration,” Masiza elaborated.
However, she pointed out that the benefits of cyber insurance go beyond financial compensation. Insurers often offer valuable advisory services, linking businesses to expert consultants and response teams for more effective loss prevention and mitigation.
Masiza provided an overview of the comprehensive support available to Allianz Commercial’s insured clients. She explained that upon reporting a new incident, the claims team at Allianz Commercial engages immediately with the affected company, coordinating with IT forensic experts, attorneys, and PR specialists to assess the situation, implement containment measures, and initiate a thorough investigation.
Masiza’s presentation also touched on underwriting considerations that are crucial when businesses seek to secure cyber insurance. Insurers, she explained, evaluate several factors during the underwriting process, including a company’s industry, size, risk profile, and existing cybersecurity measures. “It’s important to assess data governance standards, transparency in the use of consumer data, and cybersecurity measures within the supply chain,” Masiza noted, emphasising the need for businesses to maintain robust cyber hygiene.
For companies aiming to secure cyber-related coverage, Masiza advised enlisting the services of experienced brokers with a track record in placing specialised cyber insurance policies. “Brokers play a vital role in explaining complex insurance terms, assessing specific business needs, tailoring policies, and conducting thorough risk assessments to identify potential vulnerabilities and recommend mitigation strategies,” she said.
Masiza further reiterated Allianz Commercial’s commitment to protecting not only businesses but also the families dependent on the salaries earned by employees of those businesses. “Allianz Commercial understands that insurance is designed to protect the dreams of business owners and the families dependent on the salaries earned by the employees of such entities. A huge part of our role is to protect those dreams by ensuring that our Insured is up and running as soon as possible,” she noted.