Cyber insurance grows rapidly due to fear of impending attack
Rapid growth in the cyber insurance market is being driven by increasing fears of an impending and costly cyber attack, according to a survey by specialist lines underwriting agency CFC Underwriting conducted at the recent 2016 Cyber Symposium in London.
Cyber insurance is the fastest growing line of insurance in the world – the total written premium globally today is estimated at $2.5 billion and Allianz estimates it will reach $20 billion by 2025.
When asked about the growth of the UK cyber market, over 40 percent of survey respondents said that their cyber book had grown by over 50 percent in the last 12 months. CFC revealed that cyber claims amongst their customers had also increased by 78 percent from 2015 to 2016.
Discussing drivers behind this growth, a quarter of firms (23 percent) said that the “fear factor” of an impending and costly attack played a significant part, predicting it as the top driver for the demand for cyber insurance in 2017.
Respondents also cited the incoming GDPR regulation, which will impose heavy fines on firms who fail to safeguard data appropriately in 2018, as another element likely to drive up the demand for cyber insurance next year.
Electronic computer crime was cited as the area of cover that was most likely to lead to an increase in cyber insurance claims in the UK (53 percent), with non-physical business interruption coming in second (25 percent).
Inga Beale, CEO at Lloyd’s, who spoke at the Symposium, said: “There is a huge exposure out there for businesses and there is still a certain complacency amongst them that they have it under control. At Lloyd’s we are seeing huge cyber insurance uptake, and last year we introduced 15 different types of cover just for cyber, in anticipation of this demand rising in 2017.”
Graeme Newman, chief innovation officer at CFC Underwriting added: “Cybercrime is the fastest growing form of crime in the world, which means that for UK firms, it is not a case of ‘if’ you’ll experience a loss, but ‘when’. As the nature of crime changes, so too must insurance policies. The value of intangible assets now generally outstrips the value of tangible assets on corporate balance sheets. As the world becomes increasingly connected, insurers need to design future-proof policies.”
