The global cyber insurance market could grow to $5 billion in annual premiums by 2018 and at least $7.5 billion by the end of 2020, according to a new report from PwC.
The report, Insurance 2020 & Beyond: Reaping the Dividends of Cyber Resilience, revealed that 61 percent of business leaders across all industries see cyber attacks as a threat to the growth of their business, and 2014 saw an average of 100,000 global security incidents a day.
Paul Delbridge, insurance partner at PwC, said: “Given the high costs of coverage, the limits imposed, the tight terms and conditions and the restrictions on whether policyholders can claim, many policyholders are questioning whether their policies are delivering real value.
“There is also a real possibility that overly onerous terms and conditions could invite regulatory action or litigation against insurers.”
PwC suggested that insurers, reinsurers and brokers can capitalise on the cyber risk opportunity while managing the exposures by maintaining their own cyber risk management credibility through effective in-house safeguards against cyber attacks.
Robustly modelling exposures and potential losses will provide a better understanding of the evolving threat and could encourage more reinsurance companies to enter the market by identifying concentrations of exposure and systemic risks in an increasingly inter-connected economy.
Paul Delbridge, insurance partner at PwC, concluded: “For insurers, cyber risk is in many ways a risk like no other. It is equally an opportunity. Insurers who wish to succeed will base their future coverage offerings on conditional regular risk assessments of client operations and the actions required in response to these reviews.”
“A more informed approach will enable insurers to reduce uncertain exposures whilst offering clients the types of coverage and attractive premium rates they are beginning to ask for.”
