Cyber

Munich Re Global Cyber Risk and Insurance Survey

Anticipating the risks of tomorrow is not only part of our DNA, but also one of the reasons why we have accepted the cyber challenge from the first day. Since these days digitalisation and with it cyber risks keep progressing at lightning speed. Driven by this development, the need for cyber security and insurance is growing just as fast.

11.03.2021

For over a decade, we have worked closely with our clients and an ever-growing ecosystem of preeminent security and IT service providers to develop holistic insurance solutions that meet our clients' individual and evolving cyber risk needs. 

Better understanding of our client’s needs

In order to hear these needs first-hand and understand them even better, as well as to survey the general level of knowledge on contemporary cyber insurance solutions in the market, Munich Re conducted a global and representative cyber risk and insurance survey. The survey covers awareness, cyber threats for companies and private individuals and the role of cyber insurance with its cover elements and services. 

The responses to the comprehensive questionnaire in our survey underscore the need for our global efforts to make cyber risks more visible, understandable, and assessable. Adequate risk management presents significant challenges to participants across the board. Perception of the threat and who in the organization should be responsible greatly differs by geography. However, all respondents agree the future of business lies in digitalisation and new technologies. While acknowledging the sharply increasing threats posed by cyber attacks, the insurance penetration remains low in the face of increasingly drastic effects of cyber incidents at a low level. Surprisingly, even in more developed cyber markets such as the U.S., many respondents had no contact with an insurance provider, either in a professional or private context, to protect themselves against potential cyber incidents

Here are our main findings of the Global Cyber Risk and Insurance Survey:

Digitalisation is the future

Digitalisation is the future © Munich Re
The graphic shows the most relevant technology trends according to C-level respondents of our Survey: With 50% half of the current leaders see 5G to become a game changer for businesses, followed by Cloud solutions and Artificial Intelligence. Accelerated digitalisation due to the Covid-19 pandemic and enforced remote working boosts the technology trends with another 33%. And while everybody believes in digitalisation, it is surprising, that 81% of the c-level respondents think their company is not adequately protected against cyberthreats. It's a wake-up call to take care of the necessary protections and coverages now, before you will regret it later.

Risk awareness

Risk awareness © Munich Re

The second important finding is, that there are drastic differences in cyber risk awareness across the globe. While in particular the Scandinavian markets seem to be the most relaxed with only around 40% of the C-level respondents being concerned about a potentially successful cyberattack on their company, rest of the European and North American markets as well as Australia and high-tech Asian markets such as Japan and the industrialised parts of China are at a higher concern level with between 62 and 76 %. Latin American markets top the list of most concerned respondents with Brazil.

A basic awareness nowadays is inevitable. This refers to all employees up  to management but also for private individual and their families.

Insurance penetration

Insurance penetration © Munich Re
The business potential for the insurance industry is still extremely high in the cyber line of business. 35 % of the C-level study participants plan to take out cyber insurance for their company. China stands out in this segment with 67% and Brazil with 54%. The average of respondents who say they have already taken out cyber insurance is around 10%, with only Australia standing out with 20%. With still very low double-digit percentages, Japan leads the statistics of countries that have either decided against a cyber policy or have not looked into it. This goes hand in hand with the fact that one quarter of C-level respondents was totally unaware of the opportunities that holistic cyber solutions offer. In view of the average loss figures, however, the cost-benefit calculation here would be more than clearly in favour of a cyber insurance solution. This shows that the insurance industry should demonstrate more clearly the potential that lies here or, in other words, the peace of mind that adequate cover provides, which allows the company to concentrate on its own growth. The survey results also show that a disproportionate number of C-level respondents are concerned about the potential damage but do not feel sufficiently informed about the services and solutions available on the market.

Protection measures

Protection measures © Munich Re
When asked who is actually responsible in a company for preventing cyberattacks, only a quarter of the answers fell on the only correct answer from our perspective: all employees of a company bear responsibility for this. The majority of respondents who saw shared responsibility there were in the English-speaking countries: UK, USA and Australia. The vast majority of respondents globally, however, only saw the IT departments as the only point of defence here. 

Private cyber security

Private cyber security © Munich Re

In terms of private cybersecurity, Brazil, France and China were the most concerned. The Scandinavian countries were more relaxed than average, analogous to cyber security in the professional context.

It is worth mentioning that Brazil and China were most concerned about online fraud and misinformation in terms of the respective threat to private cybersecurity. Across all attack vectors, 50% of participants said they had already fallen victim to a cyberattack. China tops the list of private cyber victims with 78% and Sweden is the lucky last with just 37% of cyber victims. And while on average half of the respondents believe they are sufficiently protected from cyber threats in their private lives, respondents from Japan believe by far that they are rather poorly protected in their private lives. Across the board, the potential for professional cyber insurance protection is extremely high. 87% of all respondents said they had never been offered cyber insurance for themselves or their family.

In a nutshell

In summary, it can be concluded that awareness of cyber threats is increasing, but that insurance solutions - especially with a holistic approach such as those offered by Munich Re - are not sufficiently well known. It is up to the insurance industry to better inform its clients and develop appropriate solutions for their respective client segments. Because one thing is clear on a global level: digitalisation is advancing in leaps and bounds and does not take into account those who are not yet sufficiently prepared. The insurance industry has proven that it can provide real value-add for its clients with comprehensive solutions that adapt to the rapidly changing risk landscape. Munich Re constantly innovates as a leading cyber reinsurer, offering primary insurers and corporates long-standing knowledge, sophisticated solutions and adequate coverage from a best-in-class ecosystem. Together with our clients we are creating cyber solutions that go far beyond traditional risk transfer.

For detailed information on the results of our global cyber security and insurance survey, as well as on our products and services, please contact your client manager or our cross-divisional team of cyber experts.

Cyber Security and Insurance
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Martin Kreuzer
Martin Kreuzer
Risk Manager Cyber Risks
Axel von dem Knesebeck
Consultant
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