While cyber insurance offerings have expanded recently, the ability to keep up with demand for cyber insurance cover is a continuing challenge, and sustainable growth in the cyber insurance market should not be taken for granted, according to a new study by The Geneva Association, an insurance industry think tank.
The study identified three prerequisites to ensure the sustainability of cyber insurance:
“Expanding the boundaries of insurability is not new for insurers,” said Anna Maria D’Hulster, secretary general of The Geneva Association. “However, cyber risks are taking us into uncharted territory. Both exposures and threats have distinct characteristics, bringing unprecedented challenges.”
The report identified four key cyber accumulation risk challenges:
“Cyber risk has distinct characteristics,” said Daniel Hoffman, senior advisor for insurance economics at the institute and the study’s primary author. “Exposure bases are hard to define and measure. Historical claims data are scarce and not good predictors. Threats are constantly evolving, can spread widely and rapidly, and a series of consecutive large events is plausible. Moreover, a high degree of interconnectivity may result in potentially boundless impacts.”