In just a few short years, cyber insurance has become “must-have” coverage – particularly among larger companies. According to a September survey from the Risk and Insurance Management Society, 80% of companies with more than 1,000 employees purchased a stand-alone cybersecurity policy in 2016.
That’s at least partially due to an increased number of carriers in the cyber insurance market. As of 2015, there were more than 60 companies offering cyber insurance in the US alone, with the global market growing just as steadily. And with sales expected to reach $7.5 billion by 2020, carriers are expanding coverage and creating new products with aplomb, says Rich Johanson, risk manager with Leidos.
“As a buyer of cyber insurance, I’ve found that the market overall has been responsive,” said Johanson, who will be speaking on the future of cyber coverage at Insurance Business’s Cyber Risk 2016
on November 2. “There is a wide variety of coverage options that continue to evolve.”
Yet while market penetration is high among larger companies, there is a great deal of work to be done globally among small and mid-size businesses.
Roughly 63% of companies were insured against loss of income due to data breach in 2015, while more than half of companies without coverage considered purchasing it. Among the smallest companies – those with less than $2.5 million US dollars in revenue – penetration was at just 3.8%.
That leaves a vast amount of work to be done among insurance brokers. While the versatility of insurance packages helps improve sales, education is also a key factor, says Emily Cummins, a member of the RIMS board of directors.
“The take-up rate increases as more people are educated in the spaces,” said Cummins. “As insurance suites become increasingly available, more and more companies want to procure a plan that can fit their own unique needs.”
In fact, of those businesses that purchased cyber coverage last year, more than 82% said they were able to find coverage that met their needs.
This should only increase as insurers grow even more adept at underwriting – something that has already shown improvement, according to Johanson.
“It’s been something they’ve had a few years of experience to get their heads around,” he said.
Learn more on the state of cyber risk and cyber insurance at Cyber Risk 2016, a global live virtual event on November 2.