Cyber insurance take-up surges by 35%
A new Fitch Ratings report states that cyber insurance’s direct written volume for the property/casualty (P/C) industry grew by 35% last year to $1.35 billion (£1.06 billion).
Fitch states that the $1.35 billion figure has likely underestimated the industry’s cyber premium exposure as there are natural obstacles to breaking out cyber related premium from other coverages in multi-line coverage products.
“Take-up rates for cyber insurance are increasing with frequent reports of computer hacking incidents, including: network intrusions and data theft, as well as high-profile ransomware attacks that are leading corporations to search for broader insurance protection against cyber threats,” Jim Auden, managing director, Fitch Ratings, said in an article featured on Reuters’ website.
The industry statutory direct loss ratio for stand-alone cyber insurance has enhanced last year to 45% from 50% a year earlier. However, the ultimate success of the P/C industry’s cyber insurance efforts will take some time to assess as the market matures and future cyber-related loss events emerge.
“Future growth in cyber premiums will likely come from more consistent policy terms and conditions as insurers gain better understanding of loss potential and coverage, better cyber underwriting models, as well as efforts to comply with increased cyber regulatory standards across numerous industries, particularly financial institutions,” Auden added.
American International Group, Inc., XL Group Ltd, and ChubbLimited are three of the largest cyber insurance writers, and the companies had a combined market share in the US of about 40% at the year-end 2016.
The top 15 cyber held writers held approximately 83% of the market last year, while over 130 distinct insurance organizations reported writing cyber premiums for the year.