Affirmative cyber

Affirmative cyber refers to cyber cover that is explicitly provided for, described and priced in an insurance policy, as opposed to silent cyber where the exposure is neither mentioned nor excluded. Affirmative cover clearly defines the events covered, attacks on systems, data breaches, extortion, business interruption of digital origin, along with the exclusions, sub-limits and conditions for cover to respond. The move toward affirmation, driven by prudential authorities and by Lloyd's from 2019 onward, aims to eliminate the contractual ambiguity that prevented insurers from measuring and reserving their actual exposure. For the insured, affirmative cover offers greater legal certainty, since the scope of the cover is known in advance rather than settled by litigation after the loss. For the insurer, it enables pricing based on an identified exposure and better accumulation management. The nuance to keep in mind is that affirmation does not mean broad cover, since an affirmative policy may well provide narrow cyber cover, the essential point being that its scope is explicit rather than implicit.

Following Lloyd's directives, an insurer rewrites its property policies to exclude cyber, then separately offers an affirmative cyber cover whose limits, exclusions and premiums are clearly defined.

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