The rapid growth of cyber risk could have a negative ratings impact on insurers, Fitch has warned.
The global ratings agency noted that cyber is the fastest growing segment in property and casualty insurance with an estimated US$3 billion in premiums placed so far in 2015 with the market expected to triple in four years.
However, the rapid rise of the emerging risk and the lack of actuarial knowledge surrounding the cover could lead to negative impacts on insurers ratings.
"At this stage, Fitch would view aggressive growth in standalone cyber coverage, or movement to high portfolio concentration in cyber, as ratings negatives. Underwriting, pricing and reserving uncertainties currently outweigh the potential earnings growth benefits," James Auden, managing director at Fitch said.
"Determining loss exposures from a cyber catastrophe is difficult as it requires an assessment of events that are feared, but not yet experienced in reality.”
Auden noted that the sheer breadth of businesses that face cyber threats and the number of different policies that can be affected by cyber-related claims gives insurers pause for thought.
"Cyber risks are a broad peril affecting organisations of all sizes and in all market sectors,” Auden said.
“Insurance losses can materialise from several existing products including standard commercial liability, property, business interruption and professional liability and potentially several unforeseen product lines.”
The news follows
comments from the chairman and CEO of the Hamilton Group, Brian Duperreault who said his business will take “a cautious position on cyber.”
