The Prudential Regulation Authority ("PRA") has written to insurers with its priorities for 2024 on 11 January 2024.1
Once again, we see that cyber insurance is singled out for specific mention. The PRA notes that cyber insurance has continued to grow against the backdrop of evolving cyber related threats and geopolitical uncertainty.
The PRA refers both to operational resilience and underwriting risk:
"…our work in 2024 will focus on ensuring that firms' capital and exposure management capabilities are commensurate to the growth in exposure, as well as the inherent volatility of this risk."
The PRA's letter also states that they will "continue to monitor other relevant sources of uncertainty, including but not limited to, contract uncertainty risk".
The PRA's statement dovetails that of the FCA. Matt Brewis, the Director of the Insurance at the FCA, wrote to insurers in September 2023 with an update on the FCA's priorities for 2023-2025.2 Within its letter, the FCA flags the risks with uncertain policy wordings which may not meet customers' needs.
Our firm has extensive experience of working with the insurance market to respond to the changing nature of cyber-related risks. In particular, our wordings team regularly advise on, and draft, standalone cyber wordings.
[2] https://www.fca.org.uk/publication/correspondence/life-insurance-market-priorities-2023.pdf; https://www.dacbeachcroft.com/es/gb/articles/2023/october/fca-heralds-growth-in-cyber-but-raises-concerns/
