The number of insurance submissions in the cyber market reportedly rose by 50% in the first three months of the year compared with the same period in 2014, according to Geoff White, cyber underwriting manager at Lloyd’s syndicate Barbican. About 70% of cyber insurance customers are first-time purchasers, he said.
“In general terms, we’re continuing to see new customers purchasing cyber insurance and existing customers purchasing higher limits following recent high profile attacks,” he told The Telegraph.
British banks were among the victims of a multinational gang of cyber criminals that stole as much as $1 billion from as many as 100 financial institutions around the world in about two years. Other recent cyber attacks have targeted Sony Pictures and health insurer Anthem.
“Cyber risk poses the most serious threat to businesses and national economies, and it’s an issue that’s not going to go away,” Lloyd’s CEO Inga Beale said.
In the United States, the National Association of Insurance Commissioners has identified cyber security in the insurance sector as a key initiative for 2015, noting that most commercial policies do not cover cyber attacks.
“Although the market for cyber liability insurance is off to a good start, it is expected to grow dramatically over time as businesses gradually become more aware that current business policies do not adequately cover cyber risks,” the NAIC’s Center for Insurance Policy and Research said.
Cyber insurance policies are designed to help companies meet costs including mounting forensic investigations and defending lawsuits. However, the head of the largest Lloyd’s of London insurer has called for governments to cover the risks of cyber attacks, saying the potential liabilities are too large for insurers to cover.
Stephen Catlin, founder of Catlin Group, said in February that cyber security presented a systemic risk, in part because a vulnerability in widely-used software or internet architecture can affect systems globally, putting the insurance industry on the hook for simultaneous, multibillion-dollar payouts.