Increasing demands for cyber insurance thanks to the growing fear of cyber attacks is hiking the costs of premiums, at least according to one U.K. insurance underwriter.
CFC Underwriting Ltd. claims that the knowledge of incidents such as the Yahoo Inc. hack along with other widely reported attacks has increased the demand for cyber-insurance. Some 40 percent of companies surveyed at the 2016 London Cyber Symposium said they increased their adoption of cyber insurance by 50 percent in the last year. CFC itself said that cyber claims among their own customers had jumped 78 percent from 2015 to 2016.
The increase in demand and claims is being blamed for a subsequent increase in premiums. About 23 percent of companies signing up for cyber insurance cited a “fear factor” of a costly attack had caused them to sign up for insurance, while a further 26 percent said that the introduction of the European General Data Protection Regulation was behind their reasons to sign up. Those regulations, which were adopted in April 2016, are meant to ensure consumer data privacy but likewise imposes sanctions on companies that are not compliant or have their data hacked.
Just over a half of respondents stated that cybercrime will lead to a further increase in insurance claims, while 25 percent cited that “non-physical business interruption” will also see an increase in claims. The survey also found that 78 percent of companies operating online in the U.K. now have some form of cyber insurance.
Lev Lesokhin, executive vice president of CAST Software, which analyzes software security, told Sophos’ Naked Security that the increase in cyber attacks means that there is an increased demand for insurance services covering it: “Yes, cyber is a business opportunity for insurance companies. Where there’s risk, there’s insurance.”
What’s more, the “opportunity” is a global one. “It is an increasing business in the U.S. and E.U., not just [the] U.K.,” he said.
That insurance, however, needs to be considered carefully before it is acquired. “The problem is you have to read the fine print, because the insurance companies don’t really know how to measure their risk exposure,” Lesokhin added.
Insurance company Allianz predicts that the cyber insurance market will grow to $20 billion or higher by 2025.