As outlined by Inga Beale, the cyber insurance market has the potential to grow rapidly. There is a real opportunity here for the insurance sector to protect society as risks go digital, but in opportunity is also challenge.
One of the biggest hurdles is arguably the dearth of cyber risk data.
There is a real lack of historical data, which makes it difficult to build the predictive models that can help assess probability of loss. This hard data is in short supply for a variety of reasons;
- Firstly, insurers have not been selling cyber insurance long enough or on a big enough scale to generate their own critical mass of data
- A large percentage of cyber of events go unreported
- Cyber attacks are constantly evolving, making exposure of risk difficult to anticipate
- This insufficient data typically undermines insurer confidence in underwriting and pricing, which likely prompts carriers to play it safe by offering relatively modest limits and tightly restricted coverage
- And therefore buyers doubt coverage value - which restricts market penetration...
...and this then causes lower sales of cyber insurance, which takes you right back to start of not having access to enough data.
We call it 'the vicious cycle of cyber insurance". Read about it in our report, Demystifying cyber insurance coverage.
Lloyd's of London CEO: Cyber-insurance cost to double The chief executive of Lloyd's of London has said the increasing threat of cyber-attacks means cyber-insurance premiums are likely to double in three years.Inga Beale told the Today programme: "The cyber market at the moment we estimate is about $3-3.5bn, probably in the next three years that could easily double"."This threat is really alive for businesses," she said.