Cyber Insurance: What to Expect In the Next 5 Years

 

 

The concept of cyber insurance is not so different from other types of insurance, say car insurance, that we know. After agreeing to an insurance rate with guarantees from the insurance, you have to comply with the agreed level of cybersecurity risk and look to improve it regularly. If you get hacked after being insured, and investigations reveal that negligence or lack of awareness on your part led to the incident, your payment may be frozen or reduced. 

 

Cyber insurance will continue to grow, and this appears to be the overall consensus by professionals and experts in the industry. Cyber insurance premiums are likely to reach around $5 billion per year and will likely increase by an average of 20 – 30 percent every year. 

 

As businesses continue to develop and rely on technologies like IoT, there will be more exposure and a higher likelihood of cyber attacks because of increasing connectivity. This is why the cyber insurance market is going to see its premiums grow. Attack surfaces are evolving, and the financial incentives for attackers are growing. Additionally, businesses have more media coverage after being attacked, which is another reason companies will hedge this risk with cyber insurance.   

Cyber insurance regulations will mature better, which will cause regulatory bodies across the world to enforce stricter standards for collecting data and require constant reporting about exposure to cyber risks. In addition, requirements for collecting specific data will ensure that reporting systems are easily accessible and across the board. 

 

Data points will be using a minimal volume of data elements and will still be used for cyber exposure analysis. The required data will continue evolving depending on the cyber exposure analysis, its regulatory understanding, and the evolution of the risk involved.  We are also likely to see the introduction of regulations that make it compulsory for certain businesses to get cyber insurance mandatorily. Again, this will potentially start with healthcare and financial institutions. 

There will be more cyber MGAs (Managing General Agents) targeting small to medium markets as the need to have fully packaged cybersecurity services and insurance solutions continue to grow. Cyber MGAs have been growing in recent years, and it has been enjoyable. However, it is expected that their growth will bring about a significant consolidation trend. While some of these will continue to grow and flourish, others will be acquired by or become carriers. The ability to differentiate the best and poorest cyber risks will likely be the difference for MGAs that continue to grow and exist. 

There is a wide variation in cyber insurance policies based on terms and conditions, features, coverages, and limits. These variations are not entirely intentional yet and are part of the evolving cyber policies. However, they may lead to difficulties for policyholders that lack the understanding of the most suitable policies. They also cause problems for reinsurers when assessing their level of exposure to various risks. 

 

There have been suggestions of model policy terms. However, they have stopped insurers take up. The market is becoming hardened means that the current terms will be revised to remove ambiguity and lead towards a standard market wording reflecting the risks insurers face and exclusions they need to apply. In five years, a good level of variations in the insurance coverage of cyber threats would have been removed. 

 

 

Cyber insurance is starting to match up to cyber threats in terms of growth rate. Businesses recognize that as long as they use the internet, they are at risk of a cyber-attack and are moving to insure themselves. This is one industry that is sure to grow in the next five years. 

 

Eliza Sadler is a professional journalist with extensive experience, presently working with a UK essay writing service. 

 

References:     Forbes:       10Guards: 

 

 

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