June 26, 2017 by Staff
The U.S. cyber insurance market produced US$1.3 billion in direct written premiums in 2016, a year-over-year increase of 34.7%, finds a report from A.M. Best.
Cyber insurance is expected to one of the top areas of growth for the P&C insurance industry, according to the report. It has been estimated that this line of insurance will produce direct written premiums in the U.S. of US$20 billion by 2020 but the rating agency states it is too early to determine if the growth projections will come to fruition.
The report analyzes the trajectory of the cyber insurance space and finds that in 2016, there was a 70-30 split between standalone and packaged cyber policies in the U.S. This totals $1.3 billion, which the rating agency says is due to the increased demand for tailored cyber coverage separate from traditional products like commercial liability.
“Additionally, due to the general language of packaged policies, insurance companies have faced expensive litigation in cases where such policies did not include exclusory language,” says a press release. It says that overall, cyber insurance was profitable for American insurers, with direct loss decreasing almost 10% from 2015 (51.4%) to 2016 (46.9%).
“The decline in direct loss ratio for 2016 is partially attributed to the majority of reported cyber-attacks being related to ransomware heists. In almost all ransomware cases, the losses were well below the deductible and a simple backup recovery resolved any negative long-term effect of the attacks,” says the press release.
This story was originally published by Canadian Insurance Top Broker.