The global cyber insurance market could grow to $5 billion in annual premiums by 2018, according to new report issued by PwC at the Monte Carlo Reinsurance Rendez-Vous this week.
The report, Insurance 2020 & beyond: Reaping the dividends of cyber resilience also stated global cyber insurance is expected to hit at least $7.5 billion by the end of the decade.
Matthew Britten, PwC Bermuda managing director, insurance claimed this growth in the cyber sector represents a huge “untapped” opportunity for reinsurers to demonstrate their innovative solutions.
He said: “There is no doubt that cyber insurance offers considerable opportunities for revenue growth - and for Bermuda reinsurers to demonstrate their ability to provide innovative solutions as awareness and demand for insurance coverage grows.
“For the insurance industry, cyber risk is in many ways a risk like no other. It is equally a potentially huge, but still largely untapped, opportunity for insurers and reinsurers.”
However, despite Britten’s comments, previous PwC research revealed that 61 percent of business leaders across all industries see cyber attacks as a threat to business growth, and last year saw an average of 100,000 global security incidents a day.
The report claimed insurers who wish to succeed must base their future coverage offerings on conditional regular risk assessments of client operations and the actions required in response to these reviews.
“A more informed approach will enable insurers to reduce uncertain exposures whilst offering clients the types of coverage and attractive premium rates they are beginning to ask for,” said PwC.
The firm said businesses across all sectors are beginning to recognise the importance of cyber insurance in today’s increasingly complex and high risk digital landscape. But said that if the industry “takes too long to innovate”, there is risk that a disruptor will move in and corner the market with aggressive pricing and more favourable terms.
Britten added: “Many insurers and reinsurers are looking to take advantage of what they see as a rare opportunity to secure high margins in an otherwise soft market. Yet many others may still be wary of cyber risk due to limited historic data and the challenges in evaluating and pricing the risk.
“However, cyber insurance could soon become a client expectation and insurers that are unwilling to embrace it risk losing out on other business opportunities if cyber products don’t form part of their offering.”
PwC, Matthew Britten, PwC Bermuda, Bermuda, Europe