Adroit Market Research - Industry Insights

Cybersecurity products have become one of the most essential component of any organization. With growing digitalization, more and more personal and professional data is required to be stored on devices and clouds. Breaching of this date is no more a difficult task for cyber thieves as even the theft technique are now digitally modified. With such volatile and insecure environment, it is imperative for any organization to have their cybersecurity insured.

Cybersecurity Insurance mostly concentrates on data breaches including Personal Health Information (PHI), Personally Identifiable Information (PII), Credit Card Information and more. On the other hand, many various forms of cyber-

Cybersecurity products have become one of the most essential component of any organization. With growing digitalization, more and more personal and professional data is required to be stored on devices and clouds. Breaching of this date is no more a difficult task for cyber thieves as even the theft technique are now digitally modified. With such volatile and insecure environment, it is imperative for any organization to have their cybersecurity insured.

Cybersecurity Insurance mostly concentrates on data breaches including Personal Health Information (PHI), Personally Identifiable Information (PII), Credit Card Information and more. On the other hand, many various forms of cyber-attacks organizations prepared for Ransomware and Denial of Service (DDoS) are becoming quite prevalent. Multi-State Information Sharing and Analysis Center and DHS inform that cyber-attacks in contrary to fire departments, law enforcement and emergency services are cumulative. In the year 2013, President Obama emphasized cybercrime as a serious threat to the economy, and give out the executive order resulting in the formation of Cybersecurity Framework by National Institute of Standards and Technology (NIST). The Department of Homeland Security has applied various initiatives, involving beginning of the working group of leading insurance companies to recognize several concerns included in cybercrimes, involving emerging affordable products and services to support organizations and decreasing the financial burden on experiencing various openings of an entity.

Definition of Cyber Security Insurance

Cybersecurity insurance is the young industry around 20 years old where the services and products are being defined. Necessarily, cybersecurity insurance is the insurance product used for protecting businesses from Internet-based risks and usually from the threats related to information technology activities and infrastructure. There is a total of two kinds of losses covered. First-party losses are direct losses ensuring to the firm that is broken. Third-party losses are costs suffering from third parties like partners or customers resulting in the cyber breach.

Process of Cyber Security Insurance

The procedure of getting cybersecurity insurance is casually similar to obtaining different types of insurance. The life cycle of cybersecurity insurance has three steps: assigning a policy with the underwriter, succumbing claims and reintroducing the policy.

• Purchasing the policy: The policy may include questions and tasks like: completing the application that requests questions regarding the current security posture: What protections present in place? How susceptible are you? Are you in the industry being targeted by cybercriminals? The insurance broker presents the application to underwriters, supporting the business. Negotiate the policy terms: exclusions, deductibles, sub-limits and limits, premium.
• Succumbing Claims: Individual suffering from loss can submit the claim, with other types of insurance. Relying on the sub-limits and limits of the policy is transferred, getting compensated for protected losses defined by policy.
• Reintroducing the policy: After the yearly re-evaluation of general risk and risk profile climate of industry, brokers provide new policies. If policies are unacceptable, one can start the procedure over again with other insurers.

Trends in Cyber Security Insurance

The growth of Cyber Security Insurance: A quick growth has been seen in cybersecurity insurance amongst various segments. In the year 2015, there was an important rise in market expansion and insurance offerings.

Advisen’s Cyber Security Insurance Market Trends: In the year 2015, a survey was carried showing that the cybersecurity insurance market has developed to around USD 2 Bn in the gross written premiums with prognosticators of industry projecting it to double by the year 2020.

Measurement of Cybersecurity threats:

Evolver paper projected the development of insurance and total risk programs creating the acceptance of quantifiable risk controls technologies and processes. Novel products are striking the market for the measurement of cybersecurity threats like RiskLens. Similarly, main consulting and accounting firms like Deloitte are starting the practices in official quantification of cyber risks.

Different Trends in Cyber Security Threats

Management of Law Firm

Legal communities have developed an enhanced involvement in the area of cyber-technology. Various law firms like Wilson Elser Moskowitz Edelman & Dicker and Smith & Lewis Brisbois Bisgaard have designed the partnerships with companies of insurance to deliver various services from risk evaluation to break response. In addition, law firms are captivating the lead in starting the programs of cybersecurity for various corporations.

Partnerships of Tech and Insurance Firm

Other trends include technological companies supporting insurance companies for cyber offerings. The best instance of the acceleration is CyberEdge delivered by AIG. The CyberEdge program has K2 intelligence, Verizon, RSA and IBM as technology companies providing the set of defensive tools obtained under the AIG umbrella. Other companies of insurance are gathering the same assortments of packaged insurance & defensive tools from third-party technology companies.

Challenges of Industry

Offering cyber coverage is a comparatively new product line for the insurance industry. The main challenge is that there is little actuarial data to define suitable coverage costs, related to the issue that cyber is the vibrant area. Vulnerabilities and threats are transforming at a fast speed and the possibility of breaking can be vast. Deprived of the sufficient metrics related to severity and frequency of loss, particularly with Personal Health Information (PHI) and Personally Identifiable Information and physical damage is resulting in cyber events making the assessing risk a challenge. On considering the public sector, damaging the complex services like traffic management, waste treatment, water purification, radio systems for fire and police may cause losing life. Developing nature of the IT environment (the Cloud, Internet of Things and Virtualization) and cyber risks (Ransomware) combines emerging precise actuarial data. The source of insurance accessible to meet the market demand depending on financial ability to admit risk.

As insurance companies are dealing with different interpretations of the law. Federal demands court in Virginia Insurance is supporting the lower Federal Court in governing the commercial general liability policy (CGL) covering the data breach. The governing by U.S. Court of Appeals for 4th Circuit was the conquest for Travelers Insurance arguing its 2013 and 2012 CGL policies not needing it to protect its assured, Portal Healthcare Solutions being charged on the data breach.