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Insight Report: The Future of Cyber Risk Insurance

  • October 2015
  • -
  • Timetric
  • -
  • 36 pages

Timetric’s ‘Insight Report: The Future of Cyber Risk Insurance’ analyzes the growth potential of the cyber risk insurance market, as organizations are realizing the importance of protecting their business from damage caused by cyber attacks.

The increasing frequency of security breaches, in conjunction with business structures that are ever more reliant on technology, has augmented demand for cyber insurance. The cyber insurance market is rapidly emerging as a separate class of insurance, due to rising demand for cover for specific cyber risks, which are not covered under traditional insurance policies such as commercial general liability (CGL) and professional indemnity policies.

Insurers should start building capabilities to offer cyber-insurance products and gain early-mover advantage, as the cyber insurance market is still in its early stages of development. French insurer Axa is recruiting computer experts and engineers to build a centralized cyber team as a strategy to differentiate itself in the cyber insurance market.

The report also discusses in detail the risks and challenges faced by the insurance industry in the development of cyber risk insurance. The cyber risk insurance industry is in its initial stages of development, but its rapid growth presents challenges for insurers with respect to the insurability of cyber incidents and the use of relevant pricing models. A lack of standardization among cyber risk insurance products, and uncertainty around policy wording are creating ambiguity for buyers.

Timetric’s ‘Insight Report: The Future of Cyber Risk Insurance’ provides a detailed study on the state of the cyber insurance market globally. It provides:

- Insights into key trends regarding market size, growth opportunities, premium pricing and claims payout

- Analysis of insurability of cyber risks faced by businesses and organizations, due to the dynamic nature of cyber risks.

- Assessment of insurance as a tool in mitigating cyber risk. It also analyzes the role of insurance as a strategic tool in organizations' cyber risk management.

- Analysis of market opportunities and challenges faced by insurance companies in marketing and selling cyber risk insurance products.

- Detailed analysis of cyber risks faced by insurance companies, and the impact and costs of data breaches.

- The report discusses in detail how cyber risk insurance provides significant growth opportunities for commercial lines of insurance.

- It analyzes growth in cyber incidents, and different types of cyber risk, and their impact on businesses and organizations.

- It offers insights into the development of models to quantify cyber risk more accurately, as actuarial data is often scarce.

- It analyzes how public policy initiatives and industry standards relating cyber security are contributing to the development of cyber risk insurance.

Reasons To Buy
- Develop an insight into teh cost and components of data breaches. Analyze the reasons for increasing cyber security incidents.

- Understand the current developments in cyber insurance in terms of product offerings and cover provided by insurers.

- Gain an understanding of the different factors considered while charging premiums for cyber risk insurance.

- Build insights into risks and challenges in the development of cyber risk insurance.

- Understand how an evolving regulatory landscape in relation to data protection and privacy laws can impact the cyber risk insurance market.

Key Highlights
- Transferring risk in exchange of a premium makes commercial sense for businesses and organizations. As part of cyber risk insurance, several insurers provide value-added services such as access to a specialist lawyer, IT forensics experts and crisis management in the event of a data breach. This further makes cyber-insurance products more attractive, and also increases the value of the product to customers.

- Businesses are increasingly purchasing standalone cyber risk insurance policies to cover the specific cyber risks. Standalone cyber risk insurance policies fulfill the limitation of traditional policies by providing insurance cover for specific risks in a cyber environment. It includes the cost of security or data breach such as notification expenses, regulatory fines and penalties, investigation and restoration cost.

- Insurers are collaborating with cyber security experts to provide robust cyber risk management to the businesses and organizations. An ideal form of cyber risk management requires a balance between IT security measures and transfer of risk as an insurance solution for cyber risk. Insurers’ core competency lies in pricing and underwriting risk, while cyber security experts specialize in using technology to deal with cyber vulnerabilities.

- The cyber insurance market has the ability to offer solutions that cover a broad range of cyber risks; however, there are certain caveats. Risks faced by the firms tend to be unique to the industry in which they operate, and this requires the policy to be accordingly customized. The degree of cyber exposure, the scale of the organization and the type of data collected are key determinants of cyber insurance policy terms and pricing.

Table Of Contents

Insight Report: The Future of Cyber Risk Insurance
Table of Contents
1 Executive Summary
2 Global Trends in the Cyber Insurance Market
3 Cyber Risk and its Impact on Businesses
3.1 Cyber Risks
3.2 Cost of Data Breaches
3.3 Cyber Risk to Insurance Companies
4 Role of Insurance in Mitigating Cyber Risk
4.1 Evolution of the Cyber-Insurance Market
4.2 Types of Cover in Cyber Insurance
4.3 Insurance can play a significant role in mitigating cyber risk
5 Laws and Regulations Impacting Cyber Insurance
6 Risk and Challenges in Cyber Insurance Market
7 The Way Forward for Cyber Insurance
8 Appendix
8.1 Methodology
8.2 Contact Timetric
8.3 About Timetric
8.4 Timetric's Services
8.5 Disclaimer

List of Tables
Table 1: Collaboration Between Insurers and Cyber Security Experts
Table 2: Cyber attacks Through Point-of-Sale
Table 3: Cyber attacks on Health Insurers
Table 4: Costs Covered by Cyber Risk Insurance
Table 5: Cyber risk insurance Products
Table 6: Cyber risk Quantification Solutions
Table 7: Models used in Quantification of Cyber Risks
Table 8: Data Protection and Privacy Laws in Key Geographies
Table 9: Industry Specific Laws and Regulations on Data Protection and Privacy

List of Figures
Figure 1: Increase in Standalone Cyber Insurance by Industry in the US (2014)
Figure 2: Premiums Charged in Cyber Insurance
Figure 3: Cybercrime as Percentage of GDP (2013)
Figure 4: Growth in Cyber Security Incidents (2009-2014)
Figure 5: Impact of Cyber Crime
Figure 6: Components of Data Breach Cost
Figure 7: Average Total Cost of Data Breach, 2014
Figure 8: Milestones in Cyber risk insurance (1997-2015)
Figure 9: Types of Cyber Cover
Figure 10: Role of Insurance in Cyber Risk Management
Figure 11: Insurability of Common Cyber Risks
Figure 12: Aggregation of Risks due to Cyber Incidents

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