There’s been a surge in the purchase of cyber insurance over the last few years as clients increasingly acquire it to confront business interruption risk, Marsh asserts in a new report.
“As risk awareness has grown, more organizations, particularly those focused on their business interruption risk, are turning to the cyber insurance market for protection,” Tom Reagan, Marsh’s U.S. Cyber Practice leader, said in prepared remarks.
According to the report, clients in growing numbers are expecting their business interruption losses to be covered with their cyber policies, as insurers “more carefully define the boundaries of property, casualty and cyber policies.” Marsh said carriers have responded in kind by expanding their cyber coverage to address “a wide variety of risks while still being competitively priced.”
Marsh said the “severe economic and operational disruptions” stemming from the 2017 WannaCry and notPetya malware attacks are still on the minds of organizations ill-equipped to handle such a disruption. These attacks, as a result, are also driving the cyber insurance rocket ship.
“Those attacks, coupled with more recent, high-profile ransomware incidents, have made clear that cyber threats have evolved from data breach and theft to now include business interruption and supply chain disruption,” Marsh said in its report.
Marsh found that the number of its U.S. clients buying cyber insurance reached 38 percent in 2018, up from 19 percent in 2014. While that reflects growth among all key industries, cyber insurance purchases grew the most in 2018 among the hospitality and gaming industries (67 percent) and education (34 percent) organizations, Marsh said.
Cyber policy limits also grew in 2018, with average limits purchased by all companies hitting nearly $21 million, an 11 percent rise. For companies with more than $1 billion in revenue, average limits purchased jumped by more than 25 percent in 2018, hitting $62.4 million.
“Even as the overall numbers of purchasers has doubled over the past five years, policy limits for existing buyers are also growing as the economic impact of cyber events becomes increasingly clear,” Reagan said. “Client demand is being matched by strong carrier appetite for cyber risk, and we expect stable pricing and expanding coverage for the near future.”
These conclusions are part of Marsh’s annual Cyber Insurance Trends report: “More Cyber Insurance Buyers as Awareness Grows.”