ICA warns new cybersecurity rules could raise premiums

Australian insurers urged the government to approach these amendments with caution.

The Insurance Council of Australia (ICA) sent a letter to the Cyber Security Industry Advisory Committee and warned that amendments proposed in the Cyber Security Consultation could raise premiums on some insurance products.

In a letter by ICA’s Executive Director and CEO Andrew Hall, affordability of insurance is an increasing concern across several lines of insurance, including directors and officers (D&O) liability and professional indemnity insurance. 

“We urge the government to approach with caution any measures that would place upwards pressure on these lines of insurance, which have faced significant increases in claims costs, and therefore premiums, in recent years. Constrained D&O affordability and availability, in particular, have been the subject of evidence before parliamentary committees and are areas of focus for the federal government,” Hall wrote.

He wrote as an example the proposal to amend the Privacy Act where, if implemented, would give affected individuals the legal right to sue businesses that hold their personal information.

He noted that this will likely increase the associated risk for that business, introduce uncertainty in the insurers’ risk assessments, and increase the claims cost.

“The Insurance Council views these existing remedies available to customers to be sufficient and proportionate and is concerned that calls for additional legal avenues for privacy actions are more reflective of perception rather than a compelling need demonstrated by available evidence,” Hall said.

“The Insurance Council therefore strongly encourages the Department of Home Affairs to consider broader insurance implications of any cyber security changes to Australian regulations,” Hall added.