Recent cyber-attacks on Tesco Bank have driven up demand from companies for cyber coverage, leading to an increased demand for cyber security insurance. Currently, the market generates premiums worth about USD 2.5bn per year and is expected to grow to USD 7.5bn by 2020.
New EU regulations due to come into force in 2018 will make it compulsory for companies to report details of cyber-attacks to the authorities. Insurance experts expect the new rules to drive demand for cyber insurance as companies try to cover the reporting costs and remedial work associated with an attack. Companies that suffer data breaches could face fines of up to EUR 20m under the new rules.
Still, cyber insurance customers have in the past complained that the offered policies do not cover the damage that an attack can cause to a company’s reputation or brand.
New data from AIG shows that ransomware and extortion cause the largest number of claims on cyber insurance policies in Europe, rather than higher profile data breach incidents, according to Financial Times. The US-based insurer says that ransomware accounted for 16% of claims between 2013 and 2016.
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