(Bloomberg) — Insurers flush with capital are rushing to grabpart of an expanding cybercoverage market that's beenspurred on by high-profile hackings at JPMorgan Chase & Co. andHome Depot Inc.

Sales are set to double this year from about $1 billion in 2013,according to Bob Parisi, head of the network security and privacypractice at Marsh, the insurance brokerage arm of Marsh &McLennan Cos. The policies can protect companies against lostrevenue, lawsuits or even damage to their reputation or brand.

"There is a lot of capital looking to find a home," said RickWelsh, head of cyber coverage at Aegis London,which sells policies through LLoyd's of London, the world's oldestinsurance market. "They now see cyber insuranceas a once-in-a generation opportunity that is set for growth."

Demand for coverage has accelerated after some of the largestcompanies in the U.S. revealed that they'd fallen victimto cyber hackers. JPMorgan last week outlined thescope of a previously disclosed data breach, revealing that 76million households and 7 million small businesses had beenaffected. Home Depot said in September that a breach put about 56million payment cards at risk.

The number of cyber security incidentsglobally has soared 48 percent to 42.8 million this year, accordingto a PricewaterhouseCoopers LLP survey. The average loss for alarge company rose to $5.9 million from $3.9 million in 2013.

Chasing Risk

Carriers including American International Group Inc., TravelersCos., XL Group Plc and Lloyd's insurers like Aegis and Brit Plc areunderwriting policies. Competition helped keep prices flat, even assome claims climb into the tens of millions of dollars, saidMarsh's Parisi.

Insurers "wouldn't be chasing after this risk if they didn'tthink they could write it profitably," he said.

U.S. property-casualty insurers accumulated a record surplusafter gains on investment portfolios and two years of calmhurricane seasons. That's heightened their appetite toadd cyber-insurancecustomers, especially among thesmall-and medium-sized businesses that hadn't previously purchasedthe coverage.

"They are equally aware of their own vulnerabilities," saidMichael Tanenbaum, senior vice president of professional risk atAce Ltd. The insurer has seen the numberof cyber policies it sells to those businessesrise 60 percent annually for almost four years, he said.

Welsh and Ben Maidment, class underwriterof cyber and privacy risk at Brit, said theJPMorgan and Home Depot breaches alerted more executives to therisks. Target Corp.'s board ousted Chief Executive Officer GreggSteinhafel in May in the wake of a hacker attack that compromisedthe personal data of millions of shoppers.

'Growth Potential'

"We have barely scratched the surface," Maidment said. "There isgrowth potential, so naturally more capital is being put towork."

As sales have increased, insurers have added staff and services.Travelers hired former employees of the U.S. Federal Bureau ofInvestigation to help its clients manage risk. AIG and Ace alsoprovide advice on security. Tom Ridge, the first U.S. homelandsecurity chief under President George W. Bush, teamed up withLloyds of London to offer cyber insurance.

AIG has been offering the coverage since 1999, said TracieGrella, the New York-based insurer's global head of professionalliability. Sales have increased about 30 percent annually for thepast couple years, and are on track to jump about that much in2014, she said.

She said many of the claims AIG receives are tied to humanerror, such as lost laptop computers, rather than organizedattacks.

"The hackers are very good, and there are sophisticated attacksout there, but attacks are really happening because of humanerror," she said. "It's really about the human element."