Cyber-insurance premium ran into the $250-to-$300 million range last year, according to a recent edition of The Betterley Report.

This year's figure represents about a 60 percent rise from last year, although much of the market has yet to be penetrated.

"It seems odd that with the proliferation of Web-based commerce, there is not more of a rush toward these specially designed products," said report author Rick Betterley, president of Betterley Consultants Inc.

As insureds, agents and brokers become more knowledgeable about cyber-risk insurance, the market segment will grow dramatically, he surmised.

Mr. Betterley said that estimating such premium presents challenges in that hard data is somewhat difficult to obtain.

Most products cover risk posed by virus transmission, unlawful disclosure of private information and copyright infringement, he said.

St. Paul Travelers underwriter Aaron Latto said that widespread media coverage of privacy issue violations have enhanced awareness of the need for this product.

Its relative newness also has presented some unique underwriting challenges.

"The legal landscape about who is liable for what is changing, and in many areas unsettled," Mr. Latto said. "And it is also hard to get actuarial data on losses."

He noted that St. Paul Travelers has entered the market cautiously, "gradually increasing our scope of coverage and appetite."

While much of this coverage is written in the non-admitted market, Mr. Latto said, St. Paul Travelers has chosen the admitted route. This has given greater comfort to policyholders but not necessarily the carrier.

"Frankly, it is scarier for us as a carrier because it is a lot more regulated and a lot less flexible," Mr. Latto added.

Special Reports /

Cyber-Risk Market Up; Dramatic Growth Potential

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