Professional services firm KPMG has found that insurance companies are overlooking “real opportunities” in the cyber market, with some of the biggest risks being intangible.
According to KPMG’s “Seizing the Cyber Insurance Opportunity” report, a huge chunk of cyber claims being made are only for a small fraction of actual cyber-attack costs. The majority of the claims relate to breach of privacy, when bigger risks like reputational damage and the loss of intellectual property exist.
KPMG said these intangible risks may seem uninsurable, but there are innovative approaches insurers can take to offer protection. The auditor cited parametric cover and sophisticated risk modelling as examples.
“Those insurers that find a way of covering these intangible elements will be met with huge demand. The scale and impact of attacks in recent years has made cyber security a top priority for boards,” said KPMG.
Dan Trueman, chief innovation officer and cyber unit head at Novae, noted that cyber risk is “front and centre” of businesses’ risk radars across every industry worldwide. He said the potential market is huge for those who get the products right.
“Technology brings a wave of new risks and insurers are only dipping their toe in the ocean,” said KPMG insurance partner Paul Merrey.
He explained: “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.”
Merrey believes insurers must do a “wholesale shift” in product offerings, as well as provide a drastic boost to in-house cyber expertise, in order to respond to the demand.
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