Cyber insurance market grows by over a third last year
A recently released Fitch Ratings report suggests that this digital coverage grew by 35 percent.
A new Fitch Ratings report suggested that the cyber insurance market’s premium exposure, estimated to be $1.35 billion, is greater than predicted. Fitch pointed to natural obstacles to differentiating the cyber related premium from other forms of multi-line coverage products.
High profile hacking cases making headlines are driving interest in the cyber insurance market.
“Take-up rates for cyber insurance are increasing with frequent reports of computer hacking incidents, including: network intrusions and data theft, as well as high-profile ransomware attacks that are leading corporations to search for broader insurance protection against cyber threats,” said Fitch Ratings managing director, Jim Auden, as quoted on the Reuters website.
The Cyber insurance market statutory direct loss ratio for standalone coverage improved to 45 percent last year from having been 50 percent the year before. That said, the report suggested that the cyber insurance industry is going to require more time before its true success can be forecasted. More time is needed for an assessment of the market as it reaches a certain level of maturity and as additional loss events related to cyber attacks identify themselves.
Aulden sees premium growth in the cyber insurance market emerging from more consistent policy products.
He pointed out that “more consistent policy terms and conditions” will help insurance companies to develop a more thorough understanding of the coverage and loss potential, to improve underwriting models for this coverage, and to seek to comply with growing regulatory standards across the digital sphere in many different industries, especially when it comes to financial institutions.
The three biggest cyber insurance companies at the moment are American International Group, Inc., XL Group Ltd, and Chubb Limited. Together, they comprise approximately 40 percent of the American market share, as of the close of 2016.
Last year, the leading 15 insurers in this sector had a cyber insurance market share of about 83 percent. That said, there were more than 130 individual insurance companies that were writing premiums in the cyber marketplace in 2016. Clearly there are some established players that have grabbed hold of this space early on.