The FBI’s Internet Crime Complaint Center (IC3) took in 300,000 complaints from hacking victims in 2016. Business and individual losses hit $1.33 billion. That’s a 24% jump from 2015 numbers.
• $360 million of that is losses to businesses who got tricked into wiring money to fraudulent email addresses.
• $2.4 million is from ransomware attacks.
Fitch Ratings and A.M. Best say P&C insurers saw premiums written for cyber insurance rise 35% from 2015’s figures. Premiums totaled $1.35 billion and are expected to continue to rise in the future.
The two firms also issued reports on who writes the most cyber insurance:
• XL Group
The three write the most business and have a market share of 40%. The top 15 writers hold 83% of the market.
Others in the top 10:
• Liberty Mutual
• BCS Insurance
• AXIS Insurance Group
• Allied World
More than 130 insurers and insurance groups write cyber insurance and reported premium activity in 2016.
Fitch’s report came with a warning and said the $1.35 billion in premiums underestimates the exposure of insurers in a rapidly evolving world of cyber-attacks. So far insurers have been lucky and the payout percentage was 51.4% in 2015 but dropped in 2016 to 46.9%.
A.M. Best said ransomeware attack increases — which aren’t as expensive — is one reason for the drop. And Jim Auden of Fitch Ratings said, “Take-up rates for cyber insurance are increasing with frequent reports of computer hacking incidents, including network intrusions and data theft, as well as high-profile ransomware attacks that are leading corporations to search for broader insurance protection against cyber threats.”
The Best report also notes the top writers are shifting their emphasis to standalone policies and are leaving packaged policies. In fact, 67.9% of policies written in 2016 were standalone.
“This transition to standalone cyber policies may contribute to better pricing and reserving methods, which may ultimately lead to refinements in modeling tools and contribute to more accurate understanding of risk aggregation,” A.M Best said in its report.
Both ratings services worry about insurers getting too much exposure because pricing and underwriting risks are still in flux and uncertain. And no one knows for certain that the predicted $7.5 billion to $20 billion market will arrive by 2020.
• The Fitch report is Cyber Insurance Market Share and Performance.
• The A.M. Best report is Cyber Line Expected to be One of the Leading P/C Growth Areas.
Source links: Carrier Management, Insurance Journal