The cyber-risk insurance market is experiencing rapid development, with the rise of global gross written premiums from US$850 million in 2012 to an estimated $2.5 billion in 2014, revealed a new report from Timetric. A growing number of cyber attacks, and the increasing reliance of businesses on technology for operational capabilities and storing data, are responsible for the traction the cyber-risk insurance market is gaining. But insurance firms are responding slowly to this rising demand, and a number of imperfections in the market are leading to a suboptimal outcome.

“Total global losses from cyber crime stood at $445 billion as of June 2014. With governments becoming increasingly involved in cyber threats, the prospect of compulsory cyber-risk insurance could become a reality. It would have a transformative impact upon the market and could create a strong source of future revenues for non-life insurers,” comments Jay Patel, insurance analyst at Timetric.

Over the last few years, insurers have experienced rapid growth in the demand for cyber-risk insurance. Interest in cyber insurance has grown primarily among businesses that hold sensitive consumer information such as telecommunications companies, financial services organizations, and retailers.