Topics: Agent Resources Industry News
The cyber insurance market is booming. And with more businesses feeling the effects of data breaches and cyber attacks, the value of cyber insurance’s market share is expected to continue climbing.
The cyber liability insurance market may be in its infancy, but it’s one of the industry’s fastest growing segments and it shows no signs of stopping. Here’s what that means for the insurance industry and agents.
Cyber incidents are considered the #1 emerging risk in the near future. And as the cost of these threats increase, the value of insurance premiums will rise with them.
In fact, stand-alone cyber direct written premiums grew 7 percent in 2017 to $986 million, according to a recent report. It also found that stand-alone and package cyber premiums combined grew more than 50 percent.
The data makes it clear: the cyber insurance market is flourishing and growing faster than agents can keep up with.
Cyber incidents represent a broad, unpredictable risk — especially as new technologies emerge. On top of that, many insurance providers are facing talent shortages, with more than 400,000 professionals expected to retire over the next few years. In this landscape, more agents will need to specialize in cyber liability to keep with the pace of growth.
For agents, understanding and specializing in cyber insurance adds more value to their customer base since the exposure is growing and difficult to understand. As the cyber industry matures, agents with the most knowledge, expertise and experience in the field will be invaluable.
There is no true definition of what cyber insurance includes, since it’s a new field lacking maturity. That means insureds can expect differences in coverage across providers, even as more cyber policies emerge each year. One reason for this is a lack of claims data, which drives differences in coverage and makes it difficult to evaluate risk and create predictive models around cyber threats. This poses an interesting challenge to providers — especially with the rapidly changing nature of cyber threats. But as providers sell more cyber policies, they must use claims data they collect to understand the risk of cyber threats and craft better, more comprehensive coverage.
Many businesses may not realize they need cyber insurance, or may not understand it. Agents can help educate insured about known risks, how cyber losses are compensated and what coverages are available. Business may think their other policies – property, liability, business interruption – cover cyber related incidents, but often policies do not explicitly include or exclude cyber coverage, leaving it in a grey area. The best way a business can protect themselves likely is to have a cyber liability insurance policy.
Now is an exciting time to enter the cyber insurance game, as most policies and coverage areas are still being defined. It’s a relatively new field within the insurance world, and we’re excited to watch the cyber market develop over the next decade and beyond.