Cyber Risk insurance is booming because organizations have exposure and the insurance industry has figured out how to transfer this exposure for a reasonable price. So we were surprised to come across an article entitled Why cyber insurance isn't booming (see here). Huh?
The Cyber Risk insurance market is booming because of breach events, particularly at small and medium sized businesses (see here), and because the specialty lines insurance business has responded by underwriting the risk. So why does the article note the following (inaccurate) statements:
- While the risk of cyberattacks has risen steadily, the market to insure against it has lagged.
- Only a few dozen [insurers are] selling cyber insurance
- A chief reason that cyber insurance has not taken off is that it is difficult for carriers to compare risk from one company to another, and therefore difficult to differentiate pricing based on risk posture.
The premise that underwriters don't want to write Cyber Risk insurance because they can't assess the exposure is false. There are a lot of insurers selling standalone cyber in the US, and many more are adding some form of limited cyber into their package policies. With our specialty insurance markets we can provide cyber risk coverage to virtually any account.
In addition, the specialty lines insurance segment is built around underwriting and pricing insurance risks where there are limited data from which to project loss costs. This is a thriving part of the insurance business, and is where Cyber Risk insurance emanated.
The Cyber Risk insurance market is very active, but not everyone buys it. . From our perspective, there are two primary barriers. First, many small to medium sized companies are stretched, and just don't want to buy a new product. Secondly, the product is still confusing to clients (and their agents). While the combination is a challenge, we are selling quite a bit of Cyber Risk insurance to small & medium sized customers (via agents - we are a wholesale broker). Cyber Risk insurance will become a mainstream product in the next few years.
By the way, the coverage part that responds to breach notification regulations is first party, not third party. And the last thing we need is the federal government in the insurance market.
Cyber Risk insurance is an essential coverage and is not expensive. As a wholesale broker, we provide Cyber Risk insurance to all types of organizations through retail insurance agents and brokers.