Cyber marine insurance: Redefining risk in an interconnected world

Cyber attacks on shipping surged from 10 in 2021 to at least 64 last year, according to the BBC. The industry has responded competitively by flooding the market with cyber policies, and supply now outstrips demand. Coverage availability alone does not diminish exposure. As ports and terminals become more digitally interconnected, breaches cascade through entire supply chains. Those seeking protection face a confusing landscape of convoluted policy wording and overwhelming choice. Industry leaders must look beyond just creating new policies and redesign the framework through which the industry categorises, comprehends and communicates coverage.

Insurance has long been divided into silos: marine versus non-marine and physical versus casualty. Cyber coverage has already defied these borders and cut into hull, P&I, IT systems and the wider supply chain. With the average cargo ship now 22 years old, legacy systems collide with new digital connections, such as GPS, sensors, even satellite broadband, creating more ways in for attackers. Costs are rising too: remediation bills now average $550,000, while ransoms can run into the millions.

QRG’s Chief Business Development Officer, John Harris, has been watching the shipping sector grapple with a new wave of risks:

“Cyber-attacks against ports, ship operators and suppliers have risen in frequency and impact. Ransomware perpetrators, alleged nation state actors and opportunistic groups are hitting maritime software providers, terminal operators and legacy OT systems.”

Reshaping how coverage works

The erosion of traditional risk boundaries is reflected in how cyber itself is classified. It typically falls between liability and physical damage. Liability covers breach responses, “bricking” of IT assets, data restoration, privacy/ data loss, business interruption and cybercrime. Physical damage covers when a cyber event triggers physical loss to assets, such as vessels or control systems. Shipowners need a single policy that combines the hull risk (aka physical damage) and their shoreside exposures (aka liability).

Challenges for policyholders

Cyber policies are often written in industry jargon, leaving clients uncertain about what actually matches their risk profile. The introduction of state-sponsored exclusions adds further complexity, as policyholders, in their moment of greatest need, can be denied claims if an attack is deemed to involve a state actor.

At QRG, we believe industry leaders must act as advocates for effective, accessible cover. As the era of verification, attribution and liability becomes more demanding, the insurance sector needs to speak a clearer language and align policies with all real operational risks.

One approach, different buyers

These challenges for the industry are compounded by the fact that the buyers are diverse. Consumers, SMEs, large corporates and cyber-specialty industries. We’ve now reached the point in the cyber-policy evolution where “catch-all” policies have run their course. Future coverage must then be designed to provide sector-specific cyber solutions instead of relying on generic market templates.

Where are marine cyber risks today?

The maritime sector is a key example of the need for tailored protection. Marine cyber solutions need to cater for both shoreside networks and the ships themselves. Attacks on ships are infrequent, but breaches on corporate operations threaten heavy financial and reputational consequences. Growing connectivity, with the implementation of programs like Starlink, is blurring operational boundaries, resulting in training, verification and mitigation measures now becoming essential components for effective coverage.

As James Cooper, managing director at Astaara Company Limited, notes, “Cyber is incorporated into IMO [International Maritime Organisation] guidelines… all new ship builds now have to have cyber security incorporated into their design, but just because you have it doesn’t mean you use it well.”

Rather than viewing regulation as a hindrance, the industry should recognise it as a sign of market maturity for structure and accountability, enabling a foundation for future cyber policies.

Beyond the hull

Marine isn’t just about the ships themselves. It’s an ecosystem of ports, terminals, suppliers, software vendors and logistics. Effective coverage must address not only direct losses but also how businesses can recover from upstream or downstream outages, including contingent business interruption and vendor failure.

“The market needs to look at how it can offer cover to businesses who haven’t been hit themselves, but whose entire operating environment depends on someone else being hit,” Cooper observes.

Current policy language often leaves gaps in these areas, creating a clear market opportunity for forward-thinking underwriters and brokers to reimagine how we quantify risk in an increasingly interconnected world.

The future of cyber marine

The future of cyber marine insurance will be shaped by those who bridge risk, operations and finance to keep supply chains in motion amid a new era of invisible and often incomprehensible threats. Market opportunities from these new exposures belong to those who not only recognise but also quantify the full spectrum of risk, from the direct operational impacts to the cascading disruptions caused by mutually dependent vendor and supply chain networks.