Cyber Insurance Demand Said Rising in Europe by Friendrich Geiger
The increasing incidents of cybercrime is sparking European executives’ interest in insurance policies that cover the fallout from hacking, officials at insurance firms say in Europe say.
Demand for such protection is rising, said Jens Krickhahn, a cyber-risk expert at German insurer Allianz ALV.XE -0.07%. “Our number of deals has increased significantly,” he said about Allianz’ cyber business. He declined to disclose sales figures.
Industry experts said the European market for cyber insurance, while growing, is still at an early stage and several years behind developments in the U.S. Sales of such contracts are still minuscule, despite rising awareness of the risks among customers.
“There are only a small number of cyber insurance contracts we know of,” said Oliver Dobner, member of the executive board at insurance broker Marsh’s German operations.
The limited number of buyers can choose between a range of vendors. Most major corporate insurance firms offer cyber coverage, according to Mr. Dobner. Among them are Zurich Insurance Group, Lloyd’s of London, Hiscox and HDI-Gerling.
The sectors most affected by the rising hazards of cybercrime are financial services, manufacturing, power and utilities, and engineering, Allianz said in a report published last week.
Allianz’s cyber policies cover the costs of investigations, customer notifications and credit-monitoring services, as well as legal expenses and damages from consumer lawsuits. Allianz introduced the product in 2013.
Damages from breaches are generally higher in the U.S. than in Europe as credit cards are more frequently used and court rulings on data protection are stricter, according to Mr. Krickhahn. The U.S. therefore remains the main market for cyber policies.
In the U.K., cyber liability insurance accounts for merely 0.01% of non-life premiums, consultancy Timetric said in a 2013 report, citing industry estimates. This demonstrates the small size of the cyber insurance market.
But the attacks on Sony 6758.TO +2.73%, Target, JP Morgan JPM -1.00% and others have lifted awareness of the risks, and as companies become much more dependent on their IT, insurers are seeing more business, said Mr. Krickhahn.
“In three to five years, a considerable number of our clients will likely have cyber coverage,” Mr. Dobner of broker Marsh predicted.