Insurers may remain cautious about the opportunities brought about through cyber insurance but 2018 could be a boom year for the industry, a report has suggested.
This year’s 2017 General Insurance Barometer, released by J.P Morgan and Taylor Fry, surveyed insurers, brokers and reinsurers about the challenges and opportunities brought about by the advent of cyber.
“We are expecting 2018 to be the most exciting year for cyber insurance in Australia’s history,” Dean Marcus, consulting actuary at Taylor Fry writes in the report. “If the rate of large-scale cyberattacks continues to increase, insurance volume should grow, while the evolution of exposure assessment across lines of business, risk pricing and aggregation management will present significant challenges to all players.”
However, the industry remains cautious in its approach to the rapidly emerging market. With mandatory breach notification now a reality in Australia, Kevin Gomes, Taylor Fry principal and senior actuary, said that while there is “potential for strong growth” in the cyber market, it comes from a low base.
“A number of underwriters, while they are excited about it, are approaching it very cautiously,” Gomes said. “There is a recognition that we need to understand the gaps and overlaps between cyber insurance as a new product and some of the existing products that may already offer some cyber cover.”
From a distribution perspective, Gomes had good news for brokers but noted that insurers may look to take simpler aspects of the cover direct.
“While the distribution of cyber is an area of interest, insurers will always prefer to go direct if they can, but the complexity of cyber means that it will probably need to be intermediated,” Gomes continued. “However, where insurers may see opportunities on more straight forward cyber covers such as extortion risk, they may be able to go direct on that.”
Only time will tell if 2018 is a banner year for cyber growth, but having been discussed throughout the industry for some years, many will be asking if not now, then when?
Jordan Lynn, Insurance Business Magazine