Cyber insurance demand outside the US will grow significantly by 2017, an Allianz executive predicted.
Today, total cyber insurance premium penetration outside the US represents less than 10 percent of global cyber insurance premiums, said Nigel Pearson, who is responsible for cyber as the global head of Fidelity at Allianz Global Corporate & Specialty.
Advisen’s estimate of US cyber premium penetration is $1.075 billion.
Pearson told Advisen that market penetration in Europe and other non-US territories represents little more than $100 million right now. But rapid growth in cyber insurance penetration is expected in Northern Europe in particular over the next two or three years, he added.
Allianz is preparing to roll out its cyber program, Cyber Protect, in Australia Singapore, Honk Kong and Canada during the first and second quarters of 2014 and has plans to look at other territories during the second part of 2015.
Generally speaking, Allianz “doesn’t offer much in the way of financial lines coverage to US domiciled entities,” said Pearson. To date, only a handful of underwriters have been willing test a cyber-insurance product outside US borders.
Among them are AIG and Lloyd’s underwriter Beazely, said Ben Beeson, partner with Lockton’s Global Technology and Privacy Practice. Beeson commented:
In 2013 you started to see one or two insurers roll the dice, and say ‘now is the time to invest outside the US’.
US regulatory agencies have closely overseen data and privacy issues, and risk specialists outside the US have not encountered the same level of oversight or felt the same urgency toward the purchase of cyber insurance.
And yet, increased legislative pressures in Europe are promising “more stringent penalties and liabilities on all companies for data breaches,” Pearson noted, pointing to the new EU Data Protection Regulation and Directive.
“This is the reason why a lot of carriers are issuing policies outside the US,” he said, adding there are already “maybe 20-plus insurers offering cyber policies in the UK alone”.
Allianz’s Cyber Protect—a first-and-third party product offering—was first launched in Germany in July 2013 and has been in France, Spain, Austria, Switzerland, the UK and the Netherlands.
Allianz is preparing to roll out its cyber program in Australia, Singapore among other places where the company sees increasing interest.
The standard product covers risks including liability for data breaches and network interruption, breach notification and non-physical damage business interruption.
“Australia’s Privacy Amendment Bill 2012 is just about to come into force as of March 2014, with much tougher rules surrounding data protection,” said Pearson.
Singapore’s Personal Data Protection Act 2012 will come into force in July 2014, he observed.
Janet writes daily news including proprietary Advisen data analysis for Advisen’s cyber FPN and management liability FPN editions. She has been a financial writer since 1983 and an insurance writer for roughly 20 years, focusing on commercial property and casualty insurance. Email Janet Aschkenasy.
