Insurers are missing the real opportunities the cyber market presents, according to a report from KPMG.
KPMG said the vast majority of cyber claims currently made relate to privacy breach and normally cover the cost of notifying customers about an attack.
However, this is just a small fraction of the costs firms face when hit by a cyber-attack. KPMG said some of the biggest risks are intangible, for example, the loss of intellectual property (IP) or reputational damage.
These aspects may seem uninsurable but, according to KPMG, more innovative approaches, such as parametric cover or sophisticated risk modelling can help insurers provide this sort of protection.
The global network said those insurers that find a way of covering these intangible elements will be met with huge demand. The scale and impact of attacks in recent years has made cyber security a top priority for boards.
For example, one challenger bank CEO recently told KPMG: “The only things that keep me up at night are the unforeseen risks – cyber threats.”
Paul Merrey, insurance partner at KPMG, said: “Technology brings a wave of new risks and insurers are only dipping their toe in the ocean. To really get a foothold in the cyber market requires two things: finding solutions to the intangible costs and recognising that smart technology means cyber risks will emerge everywhere, including within traditional lines like property, motor and aviation.
“To respond to this demand, insurers need a wholesale shift in product offerings and a drastic boost to in-house cyber expertise.”
The full KPMG report can be read at this link: Seizing the Cyber Insurance Opportunity.