The cyber insurance market has been around since the 1990s. It started to pick up steam in 2003 after California passed the nation’s first privacy law. Now 48 states have privacy protection laws – New Mexico joined the groupin April 2017, leaving Alabama and South Dakota as the remaining hold-outs.
For the past several years, the cyber insurance market has grown, although the rate of growth slowed in 2016 to “only” 7%, compared to a 18% increase between 2014 and 2015.
So what does the future of the cyber insurance market look like? First, insurers will look beyond traditional risks such as health care and retail services to emerging risks such as manufacturing and homeowners coverage, two areas that are solidly connected to the Internet of Things. Second, traditional privacy protection coverage is fairly standard now: its pricing is predictable and the claims handling is good. But business interruption losses are going to ramp up. These types of losses will involve time delays, forensic accountants and maybe on-site inspections for insurers. Third, reinsurers are going to start to feel the cyber market and begin to look more closely at claims.
A brave new world. Again.