Fitch: U.S. Cyber Insurance Premiums Total $1B Per New Supplemental Filing

25/08/2016 09:42

Aggregating the cybersecurity statutory supplement data for the U.S. property/casualty (P/C) insurance industry finds that approximately 120 insurance groups reported writing cyber coverage in 2015 totaling approximately $1 billion in direct written premiums volume. Fitch analyzed cyber insurance market share and performance in a new special report, 'U.S. Cyber Insurance Market Share and Performance' that analyzes data from a new 2015 statutory supplement to compile company and industry statistics on cyber insurance.


The largest writers according to Fitch's analysis are American International Group, Inc. (AIG), accounting for approximately 22% of the market, Chubb Limited (CB) at 12%, and XL Group Ltd. (XL) at 11%.


Cyber-related insurance coverage represents a significant growth opportunity for P/C insurers. Insurance broker Marsh & McLennan Companies, Inc. (MMC) estimated that in 2014 the global insurance market wrote approximately $2 billion in cyber insurance premiums, which could multiply by a magnitude of three to five times by 2020.


"Industry estimates suggest that the global cyber insurance business could increase to $20 billion by 2020, but the lack of information on cyber insurance is a challenge for insurance companies, policyholders, regulators, and investors to evaluate and price risk," said James Auden, Managing Director, Fitch Ratings. "Challenges in isolating cyber related premiums and exposures from other risks within a package policy create limitations in analyzing the supplemental filing as total cyber insurance premiums are likely understated."


The nature of the new supplemental data filing leads to more limited information regarding underwriting results from cyber business, as information is provided solely on a direct basis and does not include information for incurred losses net of reinsurance and underwriting expenses.


The P/C industry's direct loss ratio for cyber stand-alone business in 2015 was 65.2%.


"The ultimate profitability 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," said Gerry Glombicki, Director, Fitch Ratings.


Fitch will track premium volume and loss ratios over time under this new supplement to gauge the performance of the cyber insurance market and activity of individual companies.

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