Terms like “skyrockets,” “off the charts” and “hockey stick analogy” are being used by those in the cyberliability insurance trenches to describe the growth of cyber insurance over the past year. This dramatic increase in demand—estimated to be doubling and tripling the growth seen in prior years—is correctly being attributed to the recent breaches and hacks in the news. Matthew McCabe, a senior vice president with Marsh, recently stated in The Hill, that after a cyber attack has been reported in the news, he often gets calls from companies who previously received quotes for cyber insurance saying, “You know those quotes you brought us, are those still good? Let’s buy.”
The following factors may also be contributing to this unprecedented growth:
- Cyberliability Coverage Presents Growth Opportunities for Insurers: As recently discussed in the Insurance Journal, “The United States is largely a mature insurance market, with coverage for cars, homes and other risks common. But cyber is a new frontier for insurance companies looking to grow. While estimates vary widely for how many U.S companies carry policies for such risks, the data suggests room for growth.”
- Insurers Are Gaining a Better Understanding of the Risk: Risk managers, brokers and insurers are using the same techniques for cyberliability losses as those used for catastrophe modeling for property insurance. The Insurance Journal (registration required) also reported that “while insurers and risk managers have long had detailed third-party models to help them gauge probable maximum losses for perils such as hurricanes and earthquakes, functional models for cyber crime are in their building stages.” Further, with each data breach/hack, more information becomes available to create better models.
Insurance Buyers Now View Cyberliability Insurance as a Must-Have: Until recently, smaller businesses were not seeking this insurance because of a lack of information about the coverage and the fact that it may have been cost prohibitive. As interest in this coverage grows, we will see a decrease in costs to get this insurance. Further, each event reported in the news allows more people to understand how this insurance must be in the toolbox for data breaches and hacks.