Federal and state efforts to deter cyber threats are beingdiscouraged by large companies because in most cases they willraise compliance costs, according to a top insurance industryofficial.

Peter Foster, executive vice president of Willis North Americaand the broker's resource for global network security and privacy,made the observation in the wake of a Senate panel's action onlegislation that will give U.S. officials strong authority tocombat computer espionage and theft of valuable commercialdata.

The bill, reported out by the Senate Intelligence CommitteeTuesday, must be approved by the full Senate and reconciled withsimilar legislation that passed the House of Representatives inApril.

Foster said interest in cyber insurance is growing, and isprojected to reach $1.4 billion in annual written premiums in 2014.This compares to $1 billion in annual written premiums in 2012.

Foster said the view of major corporations is that morelegislation means more paperwork and more compliance costs. He alsonoted that large companies fear greater legislative involvementbecause it means fines will be levied on companies fornon-compliance.

On another issue, Foster said the insurance industry is hopefulthat legislation reauthorizing a federal backup for terrorism riskinsurance will contain a cyber component, but officials areunsure.

The “Cybersecurity Information Sharing Act” reported out by theSenate committee in a closed session Tuesday would require thedirector of national intelligence to increase the sharing ofclassified and unclassified cyber threat information to the privatesector, consistent with the protection of sources and methods.

The bill would also offer liability protections to companiesthat appropriately monitor their networks or share cyber threatdata and limit the government's ability to use data itreceives.

The bill is sponsored by Sens. Dianne Feinstein, D-Calif., andSaxby Chambliss, R-Ga., chairman and ranking minority member,respectively, of the Intelligence panel.

Sens. Ron Wyden, Oregon, and Mark Udall, Colorado, bothDemocrats and members of the intelligence committee, said after thevote that they had opposed the bill because they felt it did notinclude sufficient privacy protections.

At the same time, there are signs that the IntelligenceCommittee bill has bipartisan support in the House. The Republicanchairman and top Democrat on the House Intelligence Committeeissued a statement on Tuesday backing the measure and urging thefull Senate to vote quickly.

Foster said interest in cyber insurance is growing across theboard, with special interest from regulated institutions, such asfinancial companies, healthcare-related businesses, point-of-saleretailers and technical service providers.

There is also growing interest from manufacturers, Fostersaid.

Foster said widely-publicized breaches do cause an “uptick” indemand, and noted cyber insurance has shown 20% annual growth overthe last five years.

Interestingly, there is growing interest from insureds to buythis product through the admitted market. “Our clients are askingfor 'written paper,' as underwriters become more comfortable tomove from surplus to the written market,” he said.

Foster said the number of underwriters writing this risk isgrowing, estimating that 50 underwriters are now providing astand-alone policy.

He said that despite growing demand, rates on cyber insurancepolicies are remaining steady. “Competition is definitely keepingpremiums steady, but recent losses are affecting rates,” Fostersaid.

Moreover, he said, “Growing regulatory interest is alsoimpacting rates.”

He also said that the only area where rates are going up ispoint-of-sale retail.

In a new white paper, the Insurance Information Institute saidCongress is proposing legislation because of a rising number ofhigh profile mega data breaches—most recently at eBay, Target andNeiman Marcus.

The I.I.I. white paper said that this is leading to increasedcalls for legislation and regulation, “placing the burden oncompanies to demonstrate that the information provided by customersand clients is properly safeguarded online.”

Robert P. Hartwig, I.I.I president, said, “Clearly, given thatthere is bipartisan support for cyber-related action, andthere is also support within the Obama administration forlegislation, this issue will be with us for a long time,”regardless of whether there will be action this year.