High profile breaches fuelled 50pc rise in cyber insurance uptake in 2016
Written by staff reporter
Figures gathered by specialist lines underwriting agency, CFC Underwriting, suggest that the fear factor was behind the growth in the cyber insurance market in 2016. Cyber insurance is the fastest growing line of cover in the world – the total written premium globally today is estimated at US$2.5bn, and Allianz estimates it will reach US$20bn by 2025.
CFC's survey, conducted at the 2016 Cyber Symposium in London, serves as a barometer of current attitudes towards the UK cyber insurance market. When asked about the growth of the UK cyber market, survey respondents agreed, with over 40% noting that their cyber book had grown by over 50% in the last twelve months. CFC revealed that cyber claims amongst their customers had also increased by 78% from 2015 to 2016. With high-profile cyber attacks at an all-time high this year, UK companies have become increasingly aware of the need to manage the risk to their intangible assets.
Discussing drivers behind this growth, a quarter of firms (23%) said that the “fear factor” of an impending and costly attack played a significant part, predicting it as the top driver for the demand for cyber insurance in 2017. Respondents also cited the incoming GDPR regulation, which will impose heavy fines on firms who fail to safeguard data appropriately in 2018, as another element likely to drive up the demand for cyber insurance next year.
Electronic computer crime was cited as the area of cover that was most likely to lead to an increase in cyber insurance claims in the UK (53%), with non-physical business interruption coming in second (25%).
Speaking at the Symposium, CEO at Lloyd’s, Inga Beale, said, “There is a huge exposure out there for businesses and there is still a certain complacency amongst them that they have it under control. At Lloyd’s we are seeing huge cyber insurance uptake, and last year we introduced 15 different types of cover just for cyber, in anticipation of this demand rising in 2017.”
Graeme Newman, chief innovation officer at CFC Underwriting commented: “Cyber crime is the fastest growing form of crime in the world, which means that for UK firms, it is not a case of ‘if’ you’ll experience a loss, but ‘when’. As the nature of crime changes, so too must insurance policies. The value of intangible assets now generally outstrips the value of tangible assets on corporate balance sheets. As the world becomes increasingly connected, insurers need to design future-proof policies.”