Cyber insurance market size expected to grow to $ 8 to 9 bn by 2020:Munich Re
The increased networking of machines and equipment in particular can also give rise to very complex risks such as data theft, disruptions in the interaction between networked machines, and even the failure of entire production lines and supply chains.
Torsten Jeworrek, member of Munich Re’s Board of Management at Monte Carlo said that the Cyber risks are one of the biggest threats to the networked economy.
Demand for prevention and insurance is growing as companies recognise their exposure and seek protection against the financial consequences of cyber risks.
Whereas in 2017 the size of the market for cyber insurance stood at US$ 3.5 to 4bn, this is expected to grow to US$ 8 to 9bn by 2020.
Insurance is only one aspect, however. At least just as important is prevention through technical measures, as well as rapid response and damage limitation in the event of a loss.
Digitalisation undoubtedly offers huge opportunities for people and companies. It can help firms to increase productivity, efficiency and quality as well as reduce risks. Digital services and products can also improve customer satisfaction.
However, the increased networking of machines and equipment in particular can also give rise to very complex risks such as data theft, disruptions in the interaction between networked machines, and even the failure of entire production lines and supply chains.
The economic costs of large-scale cyber attacks already exceed losses caused by natural disasters. Where small and medium-sized enterprises are affected, such attacks can soon threaten their very existence.
The biggest economic losses to date have been those caused by ransomware and malware, especially WannaCry and NotPetya, which, due to the growing interconnectedness of the economy, have increasingly led to business interruptions and loss of data. This trend will continue as more and more machines and devices are connected.
Munich Re is making highly targeted investments in know-how and development of networks in order to continually improve its services and insurance products. Together with technology partners, we want to keep on developing solutions for these risks in the future.”
Against this background, Munich Re offers its reinsurance clients and policyholders solutions that include considerably more than just payment for losses. These solutions are aimed particularly at smaller and medium-sized enterprises. What’s on offer ranges from a variety of technical analysis services and loss prevention measures, constant monitoring of the safety standards of technical plant, specific insurance products, all the way through to forensic investigations in the event of a loss and data recovery. Companies are thus able to resume operations more quickly.
Jeworrek: “We are taking up this challenge. Only by adapting our range of products to changing risks and requirements can we remain relevant for our clients. And only in this way can we open up opportunities for new business sectors.”
Aggregation risk of cyber insurance is 'the elephant in the room'
Only 5 per cent of cyber losses are insured, estimates Christian Fuhrmann, chief executive of global clients/North America, Munich Re. Very complex by nature and continuously changing, cyber insurance is one of the biggest challenges for insurers, he said.
Talking with A.M. Best in an interview at Monte Carlo, he also underlined the huge variety of attack incidents in the cyber field, starting with denial-of-service attacks, malware, viruses, ransomware attacks such as NotPetya, WannaCry, etc. "What you can observe is, of course, an increasing frequency and also severity," he said.
With such diversity and complexity, in an interconnected and globalized business world, the aggregation risk of cyber insurance 'is the elephant in the living room.'
"On the other hand, I think it's very positive that our industry is taking a brave approach to the issue and is offering solutions without having robust data in any sense," Fuhrmann said.
Besides aggregation, finding the most appropriate coverage for each client is a hot topic in the specialized industry. According to the Munich Re professional, contingent business-interruption enhancement and reputational risk coverage are some of the top priorities.