Cyber-Insurance Market at $2.5B and Growing
Although it's still an early market, there is a very active market for cyber-insurance.LAS VEGAS—As security threats and breaches continue to mount, there is a growing need and demand for insurance services to help mitigate risk, which is why the cyber-insurance business is now growing. In a session at the Interop conference here, David Bradford, co-founder of Advisen, detailed the current state of the cyber-insurance market. According to Advisen's analysis, the cyber-insurance business in 2015 generated $2.5 billion in premiums. In contrast to other areas of the insurance industry, cyber is still relatively small, with commercial auto insurance generating $25.8 billion in premiums and worker compensation coming in at $55 billion. The cyber-insurance market, however, is growing and by 2020, Advisen is forecasting that the market will generate $5.0 billion in premiums. Other insurance vendors are even more optimistic, with PWC forecasting $7.5 billion and ABI predicting $10 billion in premiums in 2020. Bradford stated emphatically that cyber-insurance really does work, but today it is a complicated product with policies and premiums that can vary broadly across different insurers. In general terms, cyber-insurance can include coverage for data breach costs, account takeovers, distributed denial-of-service (DDoS) attacks and even regulatory actions for privacy-related infractions. In terms of the insurance provider landscape, Bradford said that there are approximately 60 companies that write cyber insurance policies today and, in his view, many are just making it up as they go along, with little continuity of policies across different underwriters.
Bradford noted that there can also be some limited protection in general corporate insurance for cyber-security risks, but the trend he's seeing is that insurers are excluding cyber from general insurance policies.