Businesses must get ready for a new generation of cyber risks, concludes Allianz Global Corporate & Specialty (AGCS) in a research report. These risks are evolving at a rapid pace and could eventually cause operational damage, business interruption and even potential catastrophic damages.
cyber insurance vendors will begin to benefit from the increasing dangers, predicts Chris Fischer Hirs, CEO of AGCS. "Cyber insurance is not a replacement for solid IT security but it does create a second line of defense to prevent cyber incidents. AGCS sees increasing demand for these services and we are ready to work with our clients to understand and respond to growing cyber risk exposures."
AGCS predicts that increasing awareness and changing legislation will significantly boost cyber insurance sales. Over the next 10 years, the insurer expects a tenfold increase in premium volume, from $2 bln to $20 bln. "In the United States, there is already growth due to data protection regulations, while the evolution in legislation and increasing liability in the rest of the world is only now going to show growth," said Nigel Pearson, global responsible for cyber insurance within AGCS. "There is a general trend of more stringent policies regarding data protection supported in part by the threat of significant fines in the event of a breach of these."
Insurance alone is not the solution for companies in mitigating cyber risk. Insurance must be accompanied by good risk management, Allianz believes. "Once you have cyber insurance you cannot ignore IT security. The technological, operational and underwriting aspects of risk management go hand in hand," says Jens Krickhan, cyber & fidelity expert at AGCS Central and Eastern Europe.
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