Cyber-related insurance products present a “significant growth opportunity” for property and casualty insurance carriers, with more than a third of the U.S. market held by American International Group Inc. and Chubb Ltd., Fitch Ratings Inc. suggested in a report announced Wednesday.
About 120 insurance groups reported they write cyber coverage in the United States, with about US$1 billion in direct written premiums, Fitch said in a release.
The report, titled U.S. Cyber Insurance Market Share and Performance, analyzes “data from a new 2015 statutory supplement to compile company and industry statistics on cyber insurance,” Fitch added.
AIG, Chubb and XL Group plc have 22%, 12% and 11% of the market respectively, Fitch added. ACE Ltd. changed its name to Chubb after Switzerland-based ACE completed its acquisition of Warren, N.J-based The Chubb Corp. earlier in 2016. XL – which recently redomesticated from Ireland to Bermuda – has been using the XL-Catlin brand since XL acquired Catlin Group Ltd.
“Cyber-related insurance coverage represents a significant growth opportunity for P/C insurers,” Fitch stated.
The direct loss ratio for cyber stand-alone business in 2015 was 65.2%.
“The ultimate profitability of the P/C industry’s cyber insurance efforts will take some time to assess as the market matures and future cyber-related loss events emerge,” Fitch Ratings director Gerry Glombicki stated in a release.
“Industry estimates suggest that the global cyber insurance business could increase to $20 billion by 2020, but the lack of information on cyber insurance is a challenge for insurance companies, policyholders, regulators, and investors to evaluate and price risk,” Fitch Ratings managing director James Auden stated in the release. “Challenges in isolating cyber related premiums and exposures from other risks within a package policy create limitations in analyzing the supplemental filing as total cyber insurance premiums are likely understated.”
Fitch suggested that New York City-based Marsh & McLennan Companies Inc. placed about $2 billion in cyber insurance in 2014.