Demand for Cyber Insurance Growing Rapidly: Munich Re Offers More Than Just Insurance

MUNICH, Germany, Oct. 22 -- Munich Reinsurance issued the following news release:

Doris Hopke, member of Munich Re's Board of Management: "The losses from cyber attacks clearly demonstrate that cyber constitutes one of the biggest global risks. It presents the insurance industry with both a challenge and an opportunity to develop and offer solutions for cyber risks.

Digitalisation is progressing at a tremendous pace. In almost all sectors, processes are being automated and brought online in order to increase efficiency and improve client satisfaction.

At the same time, digitalisation and interconnectivity are changing the risk landscapes of companies. Cyber risks are without doubt one of today's greatest threats. Unlike traditional lines of insurance such as nat cat, fire and motor, cyber risks are global: no market, sector or company is spared, irrespective of its size.

Cyber risks are presenting the insurance industry with significant challenges. Very little long-term loss data is available, making it impossible to conduct a risk assessment using conventional models. In addition, the risks themselves are changing as digitalisation gains pace. This calls for flexible solutions that offer much more than just insurance cover. Unknown cyber risks can even be found in many existing traditional insurance policies, as the contractual conditions either did not exclude these risks or did not draft the exclusions with sufficient accuracy.

Demand for suitable insurance cover and prevention and recovery services is growing exponentially. According to estimates, the market volume for cyber insurance will grow to US$ 8-9bn by 2020 - more than twice that of 2017. Hopke stresses: "The demand for cyber risk covers is growing continuously. We therefore see it as our duty to develop solutions."

Small and medium-sized enterprises and primary insurers in particular require support. Alongside insurance cover, Munich Re's offering includes services related to technical analysis, prevention measures, ongoing review of the security standards of technical equipment, forensic investigation following a loss, and the recovery of data. In order to best meet these demands, Munich Re has in recent years cooperated and partnered up with numerous highly specialised technology companies. This secures access to the knowledge that is required for our holistic approach. Working closely with cedants allows us to better analyse client needs and draw up tailor-made solutions.

Hopke emphasises: "Protection against cyber risks could successively develop into an important field of business in its own right. As a global reinsurer, we accept the challenge of drawing up solutions for this new risk profile. Not to do this would be the biggest risk of all."