Losses from a single cyber attack could see the industry fork out more than a major loss natural catastrophe like Hurricane Katrina.
John Drzik, president of Global Risk and Specialties at Marsh, said cyber risk is the number one risk to business leaders in advanced economies, yet the industry sector is not meeting demand for cyber insurance.
The scale of a single loss from a cyber attack could cost more in damages then some of the worst natural disasters on record, he said.
“If an attacker was to take down a single cloud platform the damages could be between $50bn and $120bn; something in the range of a loss event similar to Hurricanes Sandy and Katrina,” Drzik said.
The aggregate cost of cyber is now estimated at over a $1 trillion a year, he added. In perspective, the record natural catastrophe losses posted in 2017 totalled $350bn, according to Munich Re.
Drzik’s comments follow the release of the World Economic Forum’s Global Risks Report 2018, published on Wednesday.
The report showed that environmental disasters, cyber crime, large-scale involuntary migration and illicit trade were among the most notable risks, in terms of likelihood, facing the world this year.
Drzik added: “Even as Cyber risk has become more visible, we remain vastly under resourced in the amount of effort being put into mitigating cyber risk.
“The cyber insurance market is small in relation to the size of the risk. It has been growing with about $3bn to $3.5bn of premium today covering several hundred billion dollars of risk.”
Insurance limits have been growing and companies can now receive up to $1bn of cyber coverage. Dzrik said the cyber insurance sector is expected to grow to $10bn by 2020 but that this is relatively small in scale in comparison to the size of the risk and in comparison to the property insurance market.
“The demand is out there and the insurance sector is beginning to respond in terms of the amount of capacity needed; there’s a long way to go,” he added.
Alison Martin, chief risk officer at Zurich, said where the insurance sector could add value is in risk assessment.
“Our business is risk, we need to understand risk, understand where people and businesses are exposed, gather data, model it and then price it. Through doing a risk assessment service, that is where the insurance industry can add even more value then simply the risk protection services.”
A huge well done to all involved with organising our Remembrance Day event on Friday, including our Corporate Real Estate team. One of them, Ibrahim, took this incredible footage of poppies dropping as he (along with others) leaned (safely!) over the gantry to let them go. pic.twitter.com/pSbapkWBBR— Lloyd's (@LloydsofLondon) November 12, 2018
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