Sluggish cyber-insurance market set to gain momentum

The rate of development of privacy and data security insurance products had been hampered by the fact that buyers were frustrated by the patchwork of non-standardized coverages and comparatively low limits available in the market, Advisen reports.
“An inadequate understanding of exposures and relevant insurance products by many agents and brokers also may have impeded growth,” Advisen says in its report, ‘Data Security: A Growing Liability Threat.’
As a result, the entire cyber-insurance market of which data security products are a subset is estimated to be only about US$400 million in written premium, well below analyst forecasts of several billion dollars in premium by this point in time, it continues.
“The situation is rapidly changing, however,” it continues. “Highly publicized losses have stimulated interest in insurance solutions, which in turn has encouraged more insurers to enter the market.”
As underwriters both at primary carriers and at reinsurers grow more familiar with the exposures, coverage will become broader and better tailored to specific exposures, and policy limits will increase, Advisen predicts.
“Ultimately coverages will become more standardized, making syndicated programs, and consequently much larger limits of liability, possible,” the report continues.
“At that point it is likely that the cyber-insurance market will experience the explosive growth that has long been predicted by analysts.”