As worries over the impact of a hack, data breach or other similar risks, firms are insuring themselves.
Swiss Re released a statement describing considerable growth trends in the cyber insurance market. The reinsurance firm pointed out that businesses are starting to see the importance of coverage in an environment where risks are skyrocketing.
The Zurich-based giant it pointed out that the cyber risks are rapidly rising in their complexity and frequency.
The Swiss Re Sigma report titled “Cyber: Getting to grips with a complex risk,” provided considerable insight on the trends in this sector. When discussing the perils covered by products in the cyber insurance market, the report said “the costs of a cyber breach can escalate well beyond managing the fallout of lost or corrupted data.”
The report went on to advise firms with regards to the importance of building a comprehension about reputation damage following a cyber attack. The impact to physical and intellectual property was underscored. The report also pointed to business operation disruption as a particularly damaging result of cyber attacks. “The increasing scope and magnitude of potential costs associated with cyber incidents reflect the ever-evolving cyber risk landscape,” it said.
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Swiss Re identified 3 factors in the cyber insurance market that are causing the environment to evolve.
The three factors include: hacker alertness sophistication, digital transformation speed and hyper-connectivity spread. These, said Swiss Re, have been responsible to the evolution of this ecosystem. That said, it also pointed out that while cyber insurance protection has been growing and changing along with the development of the threats, as a whole the coverage it provides is light when compared to the possible damage a company could suffer.
“Product and process innovation and also advanced analytics will help foster improved cyber insurance solutions and extend both the boundaries of insurability and reach of cover,” said the Swiss Re report.
The reinsurance giant also pointed out that some of the most extreme forms of catastrophic losses resulting from cyber attacks may be completely uninsurable. As a result, the company feels the cyber insurance market should be supported by a government-sponsored backstop comparable to the one in place providing protection against risk associated with catastrophic terrorism.