The industry of cyber insurance is moving onwards and upwards, and the technology used in its growth is evolving alongside it. Many tech-experts and professionals have been making several predictions for a while now. Although we cannot predict everything correctly, there are certain trends that are most likely to hurl the digital insurance industry to growth in 2019.
These five trends are as follows:
When we talk about regulation and cyber insurance plan, we have to consider the direct as well as indirect regulation that may have an impact on the market. Moreover, we also need to take into consideration how regulation impacts both the insurers and insureds (positively as well as through risk perspective).
The risk referred here is mainly the potential cyber-related losses caused because of inadvertent coverage. One of the best ways that most businesses deal with such risk is with the help of a cyber-insurance policy.
Companies actively look for ways to reduce a breach or data loss. Despite this, the Internet is extremely uncertain and they know for a fact that anything can happen. Hence, having cyber-security through insurance is key for their risk management strategy. Besides, there is direct regulation that explicitly targets cyber insurers.
2: Development of Cyber Insurance Linked Securities (ILS) Market and Cyber Risk Pools
Insurance providers always seek ways for expanding the availability of cyber insurance and creative ways to enter/re-enter the market.
Cyber pools offer corporate buyers with a facility of cyber insurance along with the use of capital markets funding. This thus allows for larger policy limits. Furthermore, with cyber pools, professionals can learn the cyber risk landscape and become a part of the market.
When it comes to the ILS sector, property catastrophe risks are quite prominent. However, since cyber risks are emerging, both the investors and sponsors are looking for different initiatives to mitigate them.
As a matter of fact, they need to work alongside vendors who provide advanced cyber threats intelligence, risk modeling, and rating services. It will further help them evaluate cyber risk within several different policies.
Eventually, it will increase insurers’ confidence in these products, thus leading to the growth of the cyber insurance market.
3: Silent Cyber Risk Awareness
Awareness regarding silent cyber (also known as non-affirmative cyber) is bound to increase. Insurers have realized that they have unquantified exposure. Moreover, they are searching for solutions that would quantify their exposure and option to amend/exclude coverages. This might leave them overly exposed. Once the awareness around silent cyber increases, insurers are most likely to make larger strides for overcoming coverage uncertainty.
4: Worldwide Growth of Cyber MGAs/MGUs
The rise in cyber-focused MGAs is mainly because of the need for deep expertise on the risks faced while providing cyber insurance. The predicted trend in the growth of MGAs and MGUs are motivated by both traditional as well as new businesses. The growth of MGA/MGU is evident since traditional insurers look for ways to grow their business and enter the competitive market with advanced technology. Specialized cyber MGAs is bound to become an important part of the future across the globe.
5: More Involvement from the Board of Directors
The role and responsibilities of the board of directors, especially when it comes to cyber-security, is bound to increase. Cyber-attacks can have a huge impact on the company. Thus, cyber-security should be taken as a company-wide risk management issue that has wide legal and regulatory implications.
Further, this would mean that the board of directors would be highly interested in the types of cyber insurance policies their companies take and the kind of coverage they will be receiving.
The insurance company is likely to go through major advancements in the coming years. These major advancements include:
- Awareness of silent cyber risk
- Involvement from the board of directors
Not only will it put the insurance industry into the spotlight but it will also force the insurance experts to become more educated regarding cyber risks and provide better solutions to control exposure.