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 The European Union agreed this week to change fragmented data
protection laws, forcing companies to report breaches likely to harm
individuals to national authorities within 72 hours.
Up until now, insurers say many European companies have swept the
issue under the carpet and shown little interest in cyber cover. But
anticipation of the European law has already boosted demand,
according to Paul Bantick, technology, media & business services UK
focus group leader at insurer Beazley.
"We have seen clients buying policies because they know that this is
coming," Bantick said. "Breaches are going to get more expensive,
they are going to get more complex and they (clients) want insurers
to help with both of those issues."
The development of the U.S. cyber insurance market is an indication
of possible trends in Europe, where big players in cyber insurance
also include Axa, Hiscox, Ergo (part of Munich Re <MUVGn.DE>) and
Zurich Insurance.
The U.S. market has grown by more than a third this year, with gross
written premiums totaling $2.75 billion, according to The Betterley
Report, a survey of the cyber insurance market.
Most U.S. states have introduced legislation requiring companies to
notify individuals of security breaches of personal information,
with the first law enacted in 2002. Before that, almost no cyber
insurance was written, a situation similar to the current state of
play in Europe.
LOW TAKEUP
In Germany for instance the market is only expected to total $10
million this year, while in Britain the market only totaled between
20 million pounds ($30 million) and 25 million in premiums last
year, according to brokerage Marsh.
That low takeup is already changing.
Stephen Ridley, senior development underwriter at Hiscox UK,
estimated the UK market has at least tripled this year and noted the
Lloyd's of London [LOL.UL] underwriter has seen demand increase
month by month.
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Ridley expects this to continue in 2016, boosted in part by media
coverage of the high profile data breaches that have hit UK-based
companies.
Globally cyber insurance market could double to $5 billion in annual
premiums by 2018 and reach at least $7.5 billion by the end of the
decade, according to a report by PwC.
Julia Graham, technical director at Airmic, a UK-based trade body
for company risk managers, also said there were signs of increasing
demand, particularly from industries most aware of the threat.
"There is a small but perceptible increase," Graham said. "The
sectors that are more sophisticated - financial services, law, tech
companies, pharma companies - those are the early entrants."
(Reporting by Noor Zainab Hussain in Bengaluru and Carolyn Cohn In
London; Additional reporting by Jonathan Gould; Editing by David
Holmes)
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