Cyber insurance – It’s one of the paradoxes of capitalism: the misfortune of some is often the opportunity for others. Here is an example. Take the recent cases of cyberattacks conducted against companies such as Equifax, Deloitte and FedEx. In just the first half of 2017, more than 900 attacks were recorded, with these virtual assaults having increased 164% compared to the same period last year, the specialty firm Gemalto reports. Globally, the annual costs of cybercrime amounts to 400 billion USD. For the insurers who are already, and who will be increasingly, called on to cover the risks inherent to computer crime, there is immense potential. The Fitch credit agency estimates that the current value of the market is about three billion USD, but it expects it to reach between 12 and 20 billion USD globally in only one decade.
At present, insurers are enjoying good times, since the price of policies against computer attacks remains high for a variety of reasons. The number of policyholders is still low and the insurable ceilings are relatively low. Also, insurers do not have extensive historical data to be able to accurately quantify the risks inherent in these crimes. There is a certain blurring of the basic vocabulary to be used when writing contracts, with the modus operandi of cybercriminals often only being understood after the fact.
But this blur is expected to dissipate. Faced with the immense threat posed by cyberattacks to company profitability, and even for national security, several governments are considering regulating this business sector, imposing a regulatory framework which will contribute to stabilizing policy prices. The data accumulated from previous attacks will make it possible to better assess future risks, which will have the effect of lowering prices.
In any event, the risks related to cyberattacks, as well as the way of countering them with cyber insurance, will now affect companys’ financial balance sheets. It’s the reality of the third millennium!