The threat of cyber attacks is instilling a ‘fear factor’ among UK businesses – causing a surge in UK adoption for cyber insurance.
Have you got the ‘fear factor’? Have you seen the fallout from the Yahoo mega breach and rushed to protect your businesses from the impending threat of cybercriminals operating from a dark underworld? Dramatic, yes, but you’re not alone in your panic if you answered yes to either of those questions. According to CFC Underwriting, the ‘fear factor’ of a costly cyber attack drove UK adoption of cyber insurance up a huge 50% in 2016, making cyber insurance one of the fastest growing lines of insurance in the world.
In a survey conducted at the 2016 Cyber Symposium, 40% of respondents noted that their cyber book had grown by over 50% in the last twelve months. CFC revealed that cyber claims amongst their customers had also increased by 78% from 2015 to 2016.
Inga Beale, CEO at Lloyd’s, who spoke at the Symposium said: “There is a huge exposure out there for businesses and there is still a certain complacency amongst them that they have it under control. At Lloyd’s we are seeing huge cyber insurance uptake, and last year we introduced 15 different types of cover just for cyber, in anticipation of this demand rising in 2017.”
Asked what was driving this surge in growth, a quarter of firms (23%) said that the “fear factor” of an impending and costly attack played a significant part, predicting it as the top driver for the demand for cyber insurance in 2017. GDPR, the impending regulation which will see fines levied at firms who do not safeguard data, was also found to be a key element set to drive cyber insurance demand.
Electronic computer crime was cited as the area of cover that was most likely to lead to an increase in cyber insurance claims in the UK (53%), with non-physical business interruption coming in second (25%).
“Cybercrime is the fastest growing form of crime in the world, which means that for UK firms, it is not a case of ‘if’ you’ll experience a loss, but ‘when’,” said Graeme Newman, Chief Innovation Officer at CFC Underwriting.
“As the nature of crime changes, so too must insurance policies. The value of intangible assets now generally outstrips the value of tangible assets on corporate balance sheets. As the world becomes increasingly connected, insurers need to design future-proof policies.”