Cyber Risks: what is the impact on the insurance industry?
Updated: Jan 3
As the use of technology has become increasingly prevalent in our daily lives, the risk of cyber attacks has also risen.
Cyber criminals can use a variety of tactics to gain access to sensitive information, including phishing scams, malware, and ransomware attacks. The financial impact of a cyber attack can be significant, with the average cost of a data breach in the US reaching $3.86 million in 2020.
The insurance industry has had to adapt to this growing risk by offering coverage specifically designed to protect against cyber attacks. Cyberrisk insurance is a type of insurance that helps businesses and individuals mitigate the financial impact of a cyber attack by covering the cost of responding to and recovering from an incident. This can include expenses such as legal fees, public relations efforts, and the cost of notification and credit monitoring services for affected individuals.
The demand for cyberrisk insurance has increased in recent years as more businesses and individuals have become aware of the risks they face. According to a report by the Insurance Information Institute, the global cyber insurance market is expected to grow to $14 billion by 2022, up from $2.75 billion in 2015.
However, the insurance industry also faces challenges when it comes to assessing and pricing cyber risk. The fast-evolving nature of cyber threats means that insurers must continuously update their risk models and underwriting practices to stay ahead of the curve. There is also a lack of historical data on the frequency and severity of cyber attacks, making it difficult for insurers to accurately assess risk and set premiums.
Despite these challenges, the insurance industry has an important role to play in helping businesses and individuals mitigate the financial impact of cyber attacks. By offering comprehensive cyberrisk insurance coverage, insurers can provide peace of mind and financial protection against the costly consequences of cyber attacks.