The 2016 Insurance Perspective on Cyber
Part 1: State of the Cyber Union
Thousands of handshakes and smiles later, I am back at my workstation digesting the wealth of information shared with me at the 2016 RIMs Conference in San Diego. This event was a thought provoking conference focusing on the various facets of global risk. Everywhere I looked, the one area in risk that is rapidly gaining traction is Cyber.
With the increase in dependency on technology comes a wide-‐ranging set of risks to businesses. Revenues are not the only targets for cyber criminals; threatening business reputations and disrupting services are just as enticing a way to attack a valuable business asset. Conference attendees heard that gross premiums are averaging $2.5 billion but are expected to grow to $7.5 billion by 2020. Additionally, it was estimated that a single data breach costs, on average, $3.79 million. If nothing else, it was made clear that the Cyber market is still very immature, resulting in inconsistent governance and policies. The insurance market is missing proper risk assessments and competent actuarial data to truly put a value on a client’s cyber hygiene.
With data breaches on the rise across every industry, there is a real need for sophisticated tools to help with prevention, protection and response. Brokers, carriers, and risk managers all need ways to identify and place value on potential risk pain points. Furthermore, they need to know not only if their clients have enough coverage to protect their crown jewels, but what aspects of their insurance policies provide the necessary protection should a breach occur.
In the coming weeks I will be speaking to thought leaders in the global risk and insurance industry to (hopefully) get answers to some tough questions. Given the intricacy and evolution of breaches today, we will talk about what specialized knowledge is essential before a policy can be created. We will also talk about where additional resources are needed to provide adequate cyber coverage, what areas are most at risk, and how cyber is changing the roles of carriers, brokers and insureds alike.