Private providers of cyber insurance policies have had no choice but to evolve to respond to the increasing vulnerabilities in the private and public sectors.
A new study by analyst firm R Street revealed that the market is growing at a rate of 26% to 50% per annum. And the insurance industry is keeping up. In 2015, providers collected $2.75 billion in cyber insurance premiums, and are expected to grow to $7.5 billion by 2020.
Total industry capacity is currently pegged at $500 million.
“Encouragingly, to date, policies with $50 million limits would be able to cover roughly 92% of cyber event claims,” senior fellow and study author Ian Adams was quoted as saying in an R Street update.
Still, the risk is expected to grow to gargantuan proportions over the next decade. An event that could cause $250 billion to $1 trillion in losses is 10% to 20% likely to occur in the said time frame, the study also said.
“What can be assessed for certain is that the cyber insurance market is growing rapidly and that it already has sufficient capacity to cover the overwhelming bulk of events the market already has faced,” Adams also wrote.
“It is also the case that businesses report they are satisfied with their existing cyber coverages. Unlike in the case of terrorism in the early 2000s, there is no evidence that insureds are requesting coverage limits that insurers and/or reinsurers have been unable or unwilling to fulfill,” he concluded.
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