Willis Towers Watson, a global advisory and broking company, has revealed the top-five cyber-insurance trends consumers should watch out for, in its 2018 Marketplace Realities Report: Cyber risk.
These trends are as follows:
- Total annual cyber premiums will continue to rise. Global premiums, currently at around US$2.5bn, will continue to climb and are expected to reach US$10bn by 2020, as more companies that haven't yet purchased cyber insurance seek coverage. Those without cover are expected to give cyber insurance more serious thought, given the size, scale, and financial and reputational impact of recent cyber events, such as WannaCry and NotPetya.
- Capacity will keep up with rising demand, helping keep rates in check. According to the report, the “supply of capacity is more than keeping up” with the increasing demand – as new carriers and additional capacity enter the marketplace from the U.S., London, Bermuda, and Asian markets.
And despite a series of high-profile breaches, cyber-insurance renewal programs for both primary and excess cover are averaging only single-digit rate increases; while rate increases of only up to 5% are expected in the coming year.
- Firms with robust cybersecurity programs will be rewarded. Certain carriers will lower premiums for organisations that practice comprehensive cyber-risk management.
- Demand for coverage will shift. While demand has largely been US-driven, the growing sophistication of cyber attacks, combined with stricter privacy regulations in the European Union and China, means the global cyber-insurance market is poised for “explosive growth,” the report said.
- Coverage will continue to expand as more insurers address gaps in property, general liability, and special-crime coverage, to include perils due to cyber risk – with some carriers even starting to blend coverage for cyber and property.
“With the E.U. General Data Protection Regulation (GDPR) set to go into effect in May 2018, we expect cyber markets to address coverage for regulatory actions stemming from the new regulation,” said Joe DePaul, national cyber/E&O practice leader for North America at Willis Towers Watson. “Amid increased consumer and industry reliance on Internet of Things (IoT) technology, we also expect increased gap exposures in technology errors and omissions and cyber coverage on new submissions. As cyber threats continue to evolve, my colleagues and I are optimistic the marketplace and risk-transfer solutions, along with sophisticated analytical tools, will evolve to help organizations proactively manage this complex risk. As always, risk transfer alone is not a silver bullet. We urge organizations to build a strategic and holistic approach to managing cyber risk across people, capital, and technology.”
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