In virtually every sector, automated processes are delivering greater efficiency and therefore higher productivity. By analysing a wide range of data, businesses also hope to gain new insights into existing and prospective customers, their purchasing behaviour, or the risk that they might represent. This will facilitate a more targeted customer approach. At the same time, greater levels of interconnection are leading to new business models. Examples include successful sharing concepts and online platforms.
Growing risk of ransomware
Increasing demand for cyber covers from SMEs as well
For the insurance industry, cyber policies are gradually becoming an important field of business in their own right. According to estimates, further significant increases in premium volume are on their way. In 2017, premium volume was at between US$ 3.5bn and US$ 4.0bn. This figure is expected to increase to between US$ 8.0bn and US$ 9.0bn by the year 2020. So there will be good growth opportunities over the next few years, particularly in Europe.
Cyber risks difficult to assess
How can the market opportunities be exploited, while at the same time managing the new risks? Are cyber risks ultimately uninsurable, as many industry representatives maintain? One thing is certain: there are a number of extreme risks that the insurance industry cannot bear alone. At present, these include network outages that interrupt the electricity supply, or internet and telecommunication connections. Scenarios like these, and the costs that come with them, should be borne jointly by governments and companies, for example in the form of pool solutions.
Cyber as a new type of risk
Working together to enhance security
But cyber risks remain a challenge, and one that the insurance industry needs to tackle. Insurers can only remain relevant for their clients if they constantly adapt their offerings to new or changed risks and requirements. Opportunities for new fields of business are arising.
First published at www.re-insurance.com/opinion/cyber-policies-more-than-just-risk-transfer/1687.article