Munich Re survey: Cyber insurance in Asia expected to grow by 50% by 2018
According to a survey conducted by Munich Re, almost a third of Asian insurers are expecting the market for cyber insurance to grow by 50% over the next three years.
Hong Kong. Some 83% of insurance managers who took part in the survey are already seeing increased demand for cyber insurance coverage. Yet only about 10% of the Asian respondents offer coverage for cyber risks. That is the outcome of a non-representative survey conducted by Munich Re among some 140 participants at the Singapore International Reinsurance Conference (SIRC) in November 2015.
Steady rise in demand for cyber coverage
The reasons are obvious: new technologies are developing at exponential speed, technical and production processes are becoming increasingly automated, and other trends are emerging, such as autonomous vehicles and the Internet of Things. These developments, along with the introduction of stricter laws and regulations, are the main drivers of the spike in complex cyber exposures.
Australia and South Korea have already introduced data breach legislation, and other Asian countries, such as China, Malaysia, Indonesia and India, are currently drafting corresponding legislative bills. Companies' IT safety demands are thus also increasing, and this is likely to lead to the kind of boost in demand for cyber coverage already seen in other regions of the world.
Challenging product development
But is the insurance industry in the Asia-Pacific region already able to deliver appropriate solutions? 40% of survey respondents are currently developing new cyber covers, but 43% stated that they had not yet marketed any policies.
Ludger Arnoldussen, the Munich Re Board member with responsibility for Asia, explained: "Compared with Asia (and Europe), the US markets are already relatively far advanced. According to our own estimates, the market volume for cyber covers in Asia is likely to reach US$ 0.5–1.5bn by 2020. Our aim is to assist our clients in tapping into this attractive market. We draw on our own international know-how to help them design cyber insurance products and achieve a sound balance between risk assessment, pricing, and terms and conditions."
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