AIG CEO expresses concern that cyber insurance capacity is falling short
Cyber insurance capacity may be seriously lacking, according to American International Group CEO Peter Hancock. Digital threats are becoming more prominent with every passing year. Hackers and malicious groups are beginning to target large companies that have access to valuable consumer information. This information can be stolen and exploited for various types of benefits, leaving consumers to deal with the financial fallout associated with data breach and identity theft.
Cyber protection remains somewhat rare, but the market is growing quickly
Cyber insurance is still relatively new, with very few insurance companies offering such coverage. According to Hancock, the largest coverage that he is aware of is a bank with $400 million in cyber insurance protection. While this may seem like adequate protection, cyber attacks can cause much more than $400 million worth of damage, depending on the amount of information stolen and how this information is used.
More businesses are showing a need for cyber insurance protection
The cyber market is one of the fastest growing sectors of the insurance industry, but lacks the actuarial data that is needed for insurers to provide appropriate coverage against the risks that exist in the digital world. The market has only existed since 1998, giving insurance companies access to an extremely limited amount of data. As such, insurers are somewhat cautious when providing cyber insurance coverage, as they do not fully comprehend the risks that are associated with the digital space.
Businesses may lack understanding when it comes to cyber protection
Many businesses are showing interest in cyber insurance, but they also lack an understanding of the financial impact associated with cyber attacks. In 2013, Target was the victim of a major data breach that caused an estimated $252 million in damages. The company only had a cyber insurance policy that covered $90 million of this damage, leaving Target to handle the rest of the expenses itself. Other companies that have been targeted by cyber attacks have had more comprehensive coverage, but were still unprepared to handle the expenses associated with these attacks on their own.
