Tag Archives: Cyber Insurance

Travelers says it is in ‘right spot’ for cyber insurance exposure

Travelers says it is in 'right spot' for cyber insurance exposure

By Suzanne Barlyn

(Reuters) – Travelers Cos Inc <TRV.N> plans to stick to its recent growth pace for sales of cyber insurance, which protects businesses against hacking and other liabilities, despite potential to boost it, as the insurer assesses risks in the segment, its head of specialty insurance said on Monday.

“We feel like we’re just in the right spot,” Thomas Kunkel, the insurer’s president of bond and specialty insurance, said during an investor meeting in Connecticut.

Travelers has increased its cyber business at a 40 percent compound annual growth rate since 2011 and could quicken the pace, Kunkel said. “It would not be hard,” he said.

But Travelers must be “respectful and prudent” about the risks involved in cyber, Kunkel said.

Insurers have said the growing sophistication of hackers alongside a still-evolving cyber insurance industry makes it difficult to quantify their potential cyber-related losses.

About three-quarters of cyber policies that Travelers writes cover up to $1 million in damages, while nearly a quarter cover between $1 million and $5 million, the company said.

“We manage our limits very closely,” Kunkel said.

Equifax Inc <EFX.N>, which compiles credit information about consumers and assigns them scores, disclosed in September that cyber criminals had breached its systems between mid-May and late July and stolen the sensitive information of 145.5 million people. The hack is among the largest ever.

Regulation will also drive demand for cyber insurance, particularly in the financial services sector, Fitch Ratings said in a report on Monday.

“As the cyber insurance market develops, competition is likely to erode profit margins,” Fitch said.

Some insurers who ultimately enter the cyber market may lack underwriting experience and take on risks that could exceed their capital, Fitch said.

Events that could trigger large claims include cyber attacks on electronic grids and transportation systems, or hacks of large data storage clouds, Fitch said.

Insurer American International Group Inc <AIG.N> said on Oct. 26 that it was reviewing all types of coverage it offers to gauge its exposure to cyber risk.

AIG will start including cyber coverage as part of its commercial casualty insurance during the first quarter of 2018, Tracie Grella, global head of cyber risk insurance, said at the time.

The move would boost rates but also make it clearer how customers are covered if they are the victim of a security breach.

Many commercial insurers offer stand-alone cyber coverage, but it is not yet a standard addition to most other policies, such as property and casualty.

(Reporting by Suzanne Barlyn in New York; Editing by Lisa Von Ahn and Matthew Lewis)

Rising hacker threat will trigger boom in cyber crime insurance, Tryg says

People pose in front of a display showing the word 'cyber' in binary code, in this picture illustration taken in Zenica December 27, 2014. REUTERS/Dado Ruvic

COPENHAGEN (Reuters) – Insurer Tryg <TRYG.CO> expects 90 percent of its corporate customers to buy cyber crime insurance within five years as the threat from hackers and viruses to crucial data and IT systems grows.

Tryg, Denmark’s biggest insurer, has sold 5,000 cyber crime insurance policies since the turn of the year when it launched a new product providing assistance in restoring data and getting systems up and running if a firm is hit by a cyber attack.

“There are no corporate clients today that don’t have insurance on their buildings or cars, but I think that within a very few years it will be just as evident that you should insure against cyber crime,” chief executive Morten Hubbe told Reuters on Wednesday.

The initial rise in demand for cyber insurance was prompted by the ransomware attack, named “Wannacry”, that infected more than 300,000 computers worldwide in May.

He estimated that around 50 percent of the firm’s corporate clients would buy such an insurance by 2020 and from that point it would only take “a couple of years” to reach 90 percent.

Tryg’s two business segments for small and medium size businesses and larger corporate customers accounts for 44 percent of the group’s total premium income.

“The biggest risk to us is that significantly more customers get hit than we believe and that it gives us a huge economic loss,” said Hubbe.

While the firm has good insight into how often a house burns down or a bicycle is stolen on average, the frequency and extent of cyber crimes is hard to predict.

Tryg will also offer extensions to the basic insurance that cover consequential losses, back-up of data and a so-called DNS box aimed at blocking web pages known to contain viruses and malware.

For the big industrial players, Tryg would look to cooperate with global reinsurers to spread the risk when big companies lose revenues in connection with cyber attacks.

The world’s biggest container shipping firm Maersk Line <MAERSKb.CO> saw a $2-300 million bill from a June cyber attack that disrupted its operations for weeks.

(Reporting by Stine Jacobsen; editing by Ken Ferris)