Cyber is a hot topic in insurance, and high-profile cyber-attacks appear more and more frequently in the press – but are companies buying in?
A new report from the Risk Management Society shows a 29% increase in the number of North American members who have cyber insurance, with 17% reporting that contractual obligations were a factor in taking out a policy.
Learn more on the state of cyber risk and cyber insurance at Cyber Risk 2016, a global live virtual event on November 2.
Market penetration in the US is up – but is this growing demand reflected in other global markets?
“Overall demand is certainly up, with the US marketplace seeing by far the most aggressive growth,” James Burns, cyber product leader at
CFC Underwriting, told
Insurance Business.
The UK and Canada are both seeing increased demand, and Australia is fast becoming a cyber-aware nation due to assertive government action, Burns said, but admitted that the US is still “right out in front in terms of appetite.”
“Outside of the US the story is slightly different,” he said. “Larger companies are certainly risk-transferring their cyber exposure, but the small and middle market are slower on the uptake despite many recognising that they do have risk.”
So what are the factors hindering the growth in cyber outside of the US?
According to Burns, it’s that cyber policies are being sold in a US-centric manner in other markets without considering the environmental differences.
“Cyber insurers have seen the US market’s demand for a privacy-focused product and tried to recreate that demand elsewhere, but it doesn’t work as the landscape is totally different,” Burns explained. “Non-US markets simply do not have the same breadth and depth of privacy legislation, the same punitive regulatory ethos nor the same embedded culture of class action litigation.”
However, what companies do all have in common is the threat of rampant levels of cyber-crime and attacks, and the risk of large system damage and business interruption losses – and this is where the industry should be focusing its efforts in terms of education, Burns said.
Despite this, the situation in markets outside of the US is beginning to change, due to the increasing occurrence of cyber-attacks, Burns said.
“The main driving force is a high incidence of actual cyber-attacks… A company located in the UK or Australia is as likely to be the victim of a funds transfer fraud as one in the US – so the demand in these territories has increased hugely.”
Learn more on the state of cyber risk and cyber insurance at Cyber Risk 2016, a global live virtual event on November 2.
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