Cyber Insurance Trends: Coverage Gaps Plague Businesses, US Cities
Cyber insurance is becoming increasingly popular worldwide, yet recent research indicates businesses and government organizations continue to face major coverage gaps.
In addition, some major U.S. cities have no cyber insurance policies in place, despite the potential costs, data loss and other damage commonly associated with cyberattacks and security breaches.
Chubb Ranks First Among Cyber Insurance Providers
Chubb INA Group surpassed American International Group (AIG) and XL CatlinAmerica Group to become the top cyber insurance provider last year, according to American rating agency A.M. Best. The insurer wrote $284.4 million in cyber direct premiums last year, and the majority of these premiums were written for packaged policies.
Furthermore, Hartford Insurance Group ranked first in terms of most cyber insurance policies held in force at the end of 2017, A.M. Best reported. Hartford held more than 500,000 cyber insurance policies in force at year-end.
US Firms Are Investing in Cyber Insurance
The number of U.S. firms with cyber insurance has increased in the past year, according to a survey of security executives at 500 companies conducted by data analytics company FICO.
Key findings from the FICO survey included:
- The number of U.S. firms reporting they have no cyber insurance fell from 50 percent in 2017 to 24 percent in 2018.
- 70 percent of healthcare firms and 10 percent of financial services firms said they do not have cyber insurance.
- 32 percent of U.S. firms said their cyber insurance covers all risks.
- 26 percent of U.S. firms said their insurer based their premiums on an accurate analysis of their risk profile.
The market is growing, and the litigation and fines associated with cyberattacks and data breaches continues to increase, FICO VP of Cybersecurity Solutions Doug Clare said. As such, more firms could invest in cyber coverage in the years to come.
Big City Trends
The Houston City Council this week agreed to pay $471,000 for cyber coverage, the Houston Chronicle reported. Houston’s cyber insurance policy offers coverage for up to $30 million in expenses related to security breaches in the city’s network.
Houston ranked fourth in the “Cybersecurity in the City: Ranking America’s Most Insecure Metros” study conducted by cloud security provider Coronet. Las Vegas, Nevada topped Coronet’s list of the most insecure metros in the United States, followed by Memphis, Tennessee and Charlotte, North Carolina.
The Bottom Line
Businesses, government organizations and U.S. cities face evolving cyber risks. As a result, the demand for cyber insurance likely will increase accordingly.
Cyber insurance premiums are projected to grow at a faster pace worldwide than any other type of coverage, professional services firm Aon indicated. These premiums grew 23 percent annually between 2013 and 2017, Aon stated, and could be worth nearly $4 billion by 2021.