According to a new report by KPMG some of the biggest cyber risks are intangible and may seem uninsurable but insurers applying more innovative approaches will be met with huge demand.
KPMG’s Seizing the Cyber Insurance Opportunity report claims that intangible risks include the loss of intellectual property (IP) or reputational damage and may be insurable through parametric cover or sophisticated risk modelling. As a result insurers are missing the real opportunities the cyber market presents, the report claims.
The vast majority of cyber claims currently made relate to privacy breach and normally cover the cost of notifying customers about an attack. However, this is just a small fraction of the costs firms face when hit by a cyber-attack, the authors claim.
“Technology brings a wave of new risks and insurers are only dipping their toe in the ocean,” said Paul Merrey, insurance partner at KPMG. “To really get a foothold in the cyber market requires two things: finding solutions to the intangible costs and recognising that smart technology means cyber risks will emerge everywhere, including within traditional lines like property, motor and aviation. To respond to this demand, insurers need a wholesale shift in product offerings and a drastic boost to in-house cyber expertise.”
Dan Trueman, chief innovation officer and cyber unit head of Novae, added: “Cyber risk is front and centre of businesses’ risk radars across every industry and in every country. The potential market is huge for those who get the products right. At Novae, we are building our capabilities to take a holistic approach to covering cyber-risk as we recognise that in a digital world, cyber can’t be one product.”
KPMG, Cyber risks, Cyber insurance, Dan Trueman