Best’s Special Report: Cyber Insurance Market Sees Steady Growth but Still Awaiting a Real Growth Spurt
The new Best’s Special Report, “Cyber Insurance Market Sees Steady Growth but Still Awaiting a Real Growth Spurt,” states that the cyber insurance market represents a meaningful growth opportunity for insurers, given that the take-up rate for small to medium-sized companies remains in the low teens. These companies generally remain complacent about their exposure to cyber-related events, such as data breaches and system failures, and underestimate the potential for business interruption. On the other hand, national accounts and Fortune 500 companies, particularly companies at greater risk such as financial institutions and health care companies, are increasing cyber coverage.
In 2017, cyber packaged policies in force increased 28% for the
A lack of historical experience and tested cyber exposure models continue to add to the uncertainty of underwriting cyber insurance, according to the report. Pricing sophistication varies significantly by insurer, with some using simplistic pricing based on expected losses, while others have much more sophisticated algorithms. Although a systemic event remains the top threat for cyber insurers, underpricing from new market entrants also should remain a concern.
“At this point, underwriting and pricing are driven more by market forces than by loss experience and models,” said
Other highlights from this year’s report include:
- The total number of cyber claims increased in 2017 to 9,017 from 5,955 in 2016, with packaged policies constituting 56.3% of the claims and standalone policies making up the remaining 43.7%;
-
Chubb INA Group was the top cyber insurer in 2017, rising past American International Group andXL CatlinAmerica Group , with$284.4 million in cyber direct premiums written, the majority of which were for packaged policies; and - For a third-straight year,
Hartford Insurance Group held the most cyber policies in force at year-end, with more than half a million.
Although the premium and policy increases in 2017 are material,
“Cyber events are difficult to see predict or detect — companies may not even be aware that an event has taken place — and once one has occurred, it is difficult to ascertain how far and wide they will spread,” said
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=273764.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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