A.M. Best believes that cyber insurance will be one of the leading areas of growth for the P&C insurance industry over the coming decades.
In a new Special Report the global firm said that cyber coverage is expected to grow from US$7.5bn globally, to US$20bn by 2020 as more businesses realise the importance of the cover.
With cyber attacks increasing in both frequency and severity, the ratings agency said that the market will present challenges and rewards for the industry.
“Given the seriousness, scope, and scale of a number of attacks in 2016 and 2017, as well as the potential damage these attacks can cause, A.M. Best acknowledges the opportunities this coverage presents,” the report notes.
“However, due to the uncertainty of this risk, companies need to be prudent in their underwriting practices and exercise appropriate risk management and mitigation measures.”
With mandatory breach notification set to come into full force in January, the Australian cyber market faces an important six months ahead.
Meena Wahi, a specialist cyber broker and director of Cyber Data-Risk Managers, said that while the popularity of cyber insurance is increasing, it is a slow process.
“I won’t claim it is going to be a best seller in the next six months but after mandatory breach notification, it may be more popular,” Wahi told Insurance Business.
Wahi noted that she expects the market to open up, with more insurers and underwriters launching cyber cover, as mandatory breach moves the issue to the top of mind for many businesses.
“This is when the market will really start moving,” Wahi said, of the coming six months.
“So far, it has been everyone on the fringe, doing the talk but now the real action will happen.”
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