Carriers offering cyber insurance may have seen an increase in demand for their specialty insurance policies over the past year, but more than 60 percent of risk managers surveyed say they still don’t buy the coverage, according to a report from Towers Watson.
The annual Risk and Finance Manager Survey conducted by the global professional services company revealed that only 39 percent of respondents purchased network security/privacy liability policies. Viewing the results from the perspective of P/C carriers, a positive trend revealed by the survey was the fact that the 39 percent represented an 11-percentage-point rise over the prior year’s survey.
In addition, the 2013 survey of 123 risk managers across various industries reveals that the average policy limits purchased for network security/privacy liability policies jumped 46 percent to $18.1 million.
Cyber coverage buyers, however, are most likely to be fellow insurers and other firms in the financial services sector, Towers Watson found, noting that while 56 percent of financial services risk managers said they are buying the coverage, only 33 percent of those from organizations outside the financial sector are buying.
Still, Towers Watson concludes that awareness of cyber exposure is growing among risk managers—even those that don’t buy network security coverage. The consulting firm bases this assessment on the non-buyers’ responses to a question about why they don’t purchase the policies. Only 13 percent say their decision not to purchase coverage is based on a belief that their companies don’t have a significant data exposure, Towers Watson says, noting that this represents a 10 percentage-point decline from the 2012 survey.
Similarly, the percentage of non-buyers saying that their IT departments and controls are adequate to handle cyber risk also declined 10 percentage points— to 31 percent.
The survey also investigated how buyers of network security/privacy liability policies decide on limits of coverage and on insurance carriers.
• 61 percent used benchmarking information to select limits
• 47 percent relied on their brokers
• 58 percent ranked expertise in breach preparation and response as the No. 1 factor in selecting a carrier
• 17 percent ranked pricing as the No. 1 consideration in selecting an insurer
Towers Watson’s Risk and Finance Survey also summarizes respondents’ views on terrorism coverage and strategies for dealing with a hardening P/C insurance market, and examines the use of enterprise risk management programs.
Separately, Aon Risk Solutions published a Global Risk Management Survey, asking 1,415 risk decision makers around the globe to rank the top 10 risk issues for 2013. While cyber risk (computer crime/ hacking/viruses/malicious codes) did not rank in the top 10 overall, North American respondents did rank it at No. 8.