Kenyan Companies are now exposed to losses as insurance firms shy away from covering cyber-related liabilities due to their inability to fully assess the risks involved.
According the Association of Kenya Insurers (AKI) Chief Executive Officer, Tom Gichuhi, in a phone interview with Kenyans.co.ke, the risk involved in covering cyber-related issue are yet to be fully understood by the underwriter before effective covers can be rolled out.
“This is a very new risk, it is not very clearly understood by the market, so even abilities to price it is a problem. We have not developed adequate local underwriting capacity to be able to underwrite that risk.”
Tom further notes that the sector does not have ways of knowing which direction a loss could go if it was to occur, adding that it could be monumental.
“We cannot claim to have adequate financial capacity to be able to write those kind of risks. We write it and we front those business to foreign entities, and even in those foreign markets, there is nobody who is very excited about cyber risks,” he added.
According to the AKI boss, the extent of loss that could occur has been a key reason why insurance firms continue to shy away from underwriting this kind of risk. He, however, notes that only two underwriters have taken up the challenge within the Kenyan market.
“Even the ability to do the loss adjustment, we also do not have that local capacity for the local adjusters that we have. The local assessors that we have in this market have not developed capacity in that area.”
Gichuhi called on stakeholders in the market to increase their capacity but he remains very bearish on the likelihood that much will change in the coming days.
According to him, the industry needs to look at its underwriting capacity, adding that other players in the sector such as those involved in investigating a claim need to up their game so that in the event the market is able to develop adequate underwriting capacity, it is also accompanied with adequate local loss assessment capacity
According to a Communication Authority (CA) data, it is estimated that the economy lost over Ksh35 billion to cyber related crimes with more than 56 million cyber threats being recorded in the quarter ending December 2020.
This comes as the country continues to deal with heightened cyber related breaches targeting companies for big paychecks.
Cyber insurance carriers are raising premiums and limiting coverage in the face of severe ransomware attacks, just as organizations are clamoring for more protection now and in the post-pandemic era.
According to data from the Communication Authority, there has been a 59 per cent increase in threats in the quarter ending December 2020, compared to the previous quarter.