An increasing awareness and appreciation of cyber risk, from the boardroom to the data center, is driving a 27% increase of Cyber insurance purchases by its U.S.-based clients, says New York City-based global insurance broker Marsh LLC.
According to Marsh’s “Benchmarking Trends: Operation Risks Drive Cyber Insurance Purchases,” released today, this increase continues a pattern of strong growth in Cyber insurance: 32% increase in 2014 over 2013, and a 21% increase in 2013 over 2012. The yearly increase shows that organizations see cyber as a risk to be managed, not merely a problem to be fixed by IT.
Certain industries — retail and health care, primarily — and insureds with significant losses found that markets remained challenging. Average rates at renewal typically increased throughout 2015, with increases in the latter half of the year generally lower than in the first half.
The report also found that insurer competition remains strong for business outside high-exposure classes. Organizations are realizing that they increasingly rely on technology for essential operations, and they’re looking for more coverage than indemnification for privacy breach costs. Critical infrastructure industries — including chemical, communications, energy, health care and transportation — are showing more interest in cyber coverage, especially as it relates to business interruption losses.
Companies buying higher Cyber limits, with plenty of capacity
In addition to more companies buying Cyber insurance, the report notes, companies were generally buying higher limits in 2015. Consider these average limits for example:
- $16.9 million for companies of all sizes, up from $14.7 million in 2014.
- $39.2 million for companies with revenues above $1 billion, up 15% from an average of $34.2 million in 2014.
- $86.7 million for large communications, media and technology organizations, the highest limits for any industry.
- $61 million for large financial institutions, an 18% increase over 2014.
Marsh found that overall capacity in the Cyber insurance “remains abundant” at more than $500 million, although most large towers comprise between $200 million and $400 million in limits.
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2015 Cyber insurance growth rates by industry for Marsh clients. (Source: Marsh Global Analytics)
Cyber risk is at the forefront of conversation in many organizations and is likely to remain so for the foreseeable future, Marsh predicts. As part of their risk management, companies will be monitoring a number of areas from risk financing to mitigation measures, including:
- Risk modeling.
- Regulatory developments.
- The connected world.
- Coverage innovations.
This report is available on the Marsh website (registration required).
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