The cyber-risk insurance market isexperiencing rapid development, with the rise of global grosswritten premiums from US$850 million in 2012 to an estimated $2.5billion in 2014, revealed a new report from Timetric. Agrowing number of cyber attacks, and the increasing reliance ofbusinesses on technology for operational capabilities and storingdata, are responsible for the traction the cyber-risk insurancemarket is gaining. But insurance firms are responding slowly tothis rising demand, and a number of imperfections in the market areleading to a suboptimal outcome.

“Total global losses from cyber crime stood at $445 billion asof June 2014. With governments becoming increasingly involvedin cyber threats, the prospect of compulsory cyber-risk insurancecould become a reality. It would have a transformative impact uponthe market and could create a strong source of future revenues fornon-life insurers,” comments Jay Patel, insurance analyst atTimetric.

Over the last few years, insurers have experienced rapid growthin the demand for cyber-risk insurance. Interest in cyber insurancehas grown primarily among businesses that hold sensitive consumerinformation such as telecommunications companies, financialservices organizations, and retailers.