Warren Buffett recently warned that cybersecurity insurance risks are getting overlooked as agents rush to sign up clients and 'huge losses' could be ahead.
Warren Buffett and Berkshire Hathaway 's top insurance executive Ajit Jain recently warned of the potential for "huge losses" in cybersecurity insurance in annual meeting comments.
"That aggregation potential can be huge, and not being able to have a worst-case gap on it is what scares us," he said. Any government involvement "will probably happen after a big, expensive cyber-incident," he said. "After September 11, the government put together a terrorist risk program. In cyber, we have not yet seen an attack of that scale. We are still in the stage of thinking about possible approaches."While the number of cybersecurity policies being written is small now, analysts don't expect it to stay that way.
And more insurers are entering the market because they have the tools and data to price the risk. "If you can do it at sound rates, you will write that coverage," Friedlander said.Buffett and his top insurance lieutenant don't agree. It's the insurance "loss cost" — what the cost of goods sold could potentially be — that has Berkshire on the fence with a bigger move into cyber insurance.
"What they are trying to do is remain resilient and solvent in the event of a widespread event; what they have done to manage that is put in exclusions," Shokrai said, and those include critical infrastructure, cyber war, and other widespread disruptive events.
Berkshire Hathaway Warren Buffett Computer Crime Cyber Threat Cyberattack Insurance Industry Cybersecurity Technology Suppress Zephr Hacking Ajit Jain Business News
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