Speaking at Mexico’s AMIS Insurance Conference, Lloyd’s Inga Beale reiterated the urgency of getting aboard the cyber insurance market, which she said could triple in size to $7.5 billion by 2020.
“I don’t think that, as a sector, we are doing enough to promote the benefits of cyber insurance and make it accessible to businesses. Unless we get our act together, the opportunity could pass us by.
“This business won’t come to us – we have to go and find it, and we have to get better at explaining our value proposition,” Beale said.
It’s no secret that the cost of cybercrime incidents is set to shoot through the roof in coming years – statistics from one report – quoted by Beale in her speech, show cybercrime incidents will go from $3 trillion in early 2015 to a projected $6 trillion by 2021.
And Mexico comes into play for re/insurers as one of the emerging Latin American markets most impacted by cybercrime – ranking second place for frequency of attacks after Brazil – as a country where cyber crime affects millions of citizens.
Beale went on to suggest that cyber re/insurance demand is being further propelled by rating agencies and governments, who are responding to the growing threat with more stringent cyber-related regulations and rating actions based on firm’s exposure to or incidence of cyber threat, particularly where loss or theft of data is involved.
She quoted the soon-to-come EU’s General Data Protection Regulation, GDPR, which means that from next year companies could be fined up to €20 million or 4% of their global turnover, if they fail to comply with the new rules.
And the Mexican government has already introduced new cyber legislation – having recently implemented the General Law for the Protection of Personal Data – which states that organisations that process personal data must be aware of the risk of a data breach and consider it when making liability or D&O policies.
Beale said other markets have developed as a response to the cyber threat with “exclusions being applied, sub-limits being imposed or endorsements being introduced. We have also seen a dramatic increase in demand for cyber specific insurance.”
“Digitalisation has been the most recent force that is profoundly changing the way we connect, and the way we do business –
“Looking specifically at the way business has changed over the last 40 years – as an example, in 1975 the split of assets of the S&P500 market value was 83% tangible and 17% intangible. Today this has completely reversed to 16% tangible and 84% intangible.”
“The weaponisation of code has grown more lucrative and more destructive. And the potential for real systemic damage is truly scary.
“These aggressive and crippling hacking attacks on businesses and governments will only get worse, as cyber criminals find new ways of exploiting vulnerable systems, and the people who use them.”
“If we look at the growing internet of things – where millions of devices such as lightbulbs, fridges and security cameras are being connected to the internet – we can see that there is increasing network vulnerability,” Beale added, before concluding that one of the main challenges ahead for re/insurers is to “help businesses understand the value of cyber insurance – both in terms of risk transfer and risk mitigation.”