NEW YORK — The nascent penetration of cyber risk insurance products and the potential for further expanding the market was front and center among issues discussed by a panel of insurance industry chief executives at the Insurance Information Institute Inc.'s Joint Industry Forum in New York on Tuesday.
“This is still a very small market that gets more talk than action, but it is a growth opportunity,” said Peter Hancock, executive vice president of American International Group Inc. and CEO of the insurer's property/casualty unit.
He added that market growth will involve learning how to measure and value different types of cyber risks. “Prudence suggests that limits remain small while we learn,” said Mr. Hancock.
Cyber risk products “have improved over the past five years, but the (insurance) industry needs to play a still bigger role” said Daniel Glaser, president and CEO of Marsh & McLennan Cos. Inc. “Policies will take off after there is more awareness,” said Mr. Glaser, adding that the rising profile of cyber risks will help this effort.
“Cyber risk is such a broad term, you must carve it into pieces,” said Franklin Montross, chairman and CEO of General Re Corp. “The most prevalent product in the marketplace now is first- and/or third-party breach, but without products, you can't write more coverage.”
Confronted with ever-increasing cyber exposures, insurance companies, like their clients, are taking steps to protect data.
“The (security) standards in Europe are higher; we've had to encrypt certain claims data and restrict access,” said Michael Sapnar, president and CEO of both Transatlantic Corp. and its Transatlantic Reinsurance Co. subsidiary.
As for writing business, Mr. Sapnar said the total annual cyber premium in the United States is $1.6 billion.
“Like every large company, we are under constant attack,” said Mr. Hancock of AIG's own cyber exposures. But redundant protective layers through which attackers must pass allows the company to learn about those intruders, he said.