Financial Crime World

Cyber Insurance Market Sees Significant Growth Potential

The cyber insurance market is expected to experience significant growth potential in the coming years, according to experts. This growing demand for comprehensive cybersecurity solutions is driven by the increasing sophistication of hacking methods and the need for enterprises to protect themselves against cyber-related incidents.

Insurers Offering Wider Coverage Options

As the market matures, insurers are beginning to offer a wider range of coverage options, including:

  • Product liability
  • Bodily injury
  • Property damage

This shift highlights the growing importance of cybersecurity in enterprise risk management, requiring board-level attention. Thomas Blunck, a leading reinsurer, has stated that his company is committed to maintaining cyber as a standalone cover, enabling better modeling of exposures and more accurate pricing.

Gaps in Risk Management Landscape

A recent study by AIG found that:

  • Senior management, including those at major financial institutions, have a high degree of confidence in their company’s risk management practices.
  • However, over 40% of boards stated they do not have the right skills and knowledge to manage innovation and risk in the digital world.

The report also revealed that only 26% of companies discuss their cybersecurity policy regularly at board meetings, while over half (52%) rarely or never discuss it. This highlights the need for a full solution that embeds cyber risk management at board level and involves regular conversations with external parties, including insurers.

Optimism for Growth

Despite these challenges, experts remain optimistic about the potential for growth in the cyber insurance market. As hackers continue to develop new and sophisticated methods of attack, the demand for comprehensive cybersecurity solutions is likely to increase.

References:

  • Schwartz, J. (2016) ‘Show me the money: Financial sector a big target for cyberattacks’, mediapro.com
  • Ponemon Institute and Hewlett Packard Enterprise (2015) ‘2015 cost of cyber crime study: United Kingdom’, cnmeonline.com
  • ThreatMetrix (2015) ‘ThreatMetrix cybercrime report, Q4 2015’, threatmetrix.com
  • Central Bank of Ireland (2016) ‘Cross industry guidance in respect of information technology and cybersecurity risks’, centralbank.ie
  • Board of Governors of the Federal Reserve System (2013) ‘Interagency guidelines establishing information security standards’, federalreserve.gov
  • Conference of State Bank Supervisors (2015), ‘Cybersecurity 101: A resource guide for bank executives’, csbs.org
  • AIG (2015) ‘Cyber: Joined up? 2015’, Captains of Industry, aig.co.uk
  • Blunck, T. (2016) Address at the Monte Carlo Rendez Vous de Septembre
  • HM Government (2016) ‘FTSE 350 cyber governance health check’, gov.uk