A new report from reinsurance specialist Guy Carpenter highlights the significant financial impact of business email compromise (BEC) claims, which are often categorised as draining and frequency-driven within the cyber insurance market.

The report, titled “The Sleeping Cyber ​​Threat: Business Email Compromise,” examines the threat and impact posed by business email compromise attacks, a sophisticated form of phishing that targets human vulnerabilities rather than technical vulnerabilities.

In these attacks, perpetrators impersonate trusted entities to trick employees into transferring funds, evading traditional security measures.

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According to an analysis of Marsh’s claims database over the past five years, more than 550 successful BEC events have impacted Marsh clients with cyber or criminal insurance policies.

The report indicates that most of these events resulted in losses of about 0.1% of the company’s revenue. For a company with revenues of $1 billion, this means a loss of $1 million.

Read more: Reinsurance Market Responds to Growing Demand as Mid-Year Renewals Approach – Guy Carpenter

Despite the financial threat that a cyberattack poses to businesses, the report notes that e-vendor models vary in their approach to handling business cyberattack claims in catastrophic event catalogs. Only one industry-leading vendor explicitly included business cyberattack as a cyber risk in its models.

While cyber threats such as ransomware attacks, exploits of undiscovered vulnerabilities, and cloud service provider outages often dominate headlines, the consequences of a successful BEC attack can be even greater, said Erica Davis (pictured above), global co-head of cybersecurity at Guy Carpenter.

“However, the consequences of a successful BEC attack can also be devastating to the organization and cause significant losses to reinsurers/cyber insurers. By raising awareness of the right cybersecurity measures, we can collectively improve organizations’ resilience to BEC threats and mitigate their impact on underwriting profitability,” said Davis.

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