Out-Law News | 24 Jan 2019 | 11:10 am | 2 min. read
The reinsurance company said it expects the market for personal cyber insurance to follow a "similar growth trajectory" to the growth forecast for commercial cyber insurance products once products providing personal cover become more mature and are more widely available. The commercial market is predicted to grown from between $4-4.5bn in 2018 to between $7.5-10bn by 2020, it said.
"Although the size of the market is hard to estimate, our analysis leads us to believe the worldwide market for personal lines cyber insurance could reach between $1.6 billion and $3.1 billion by 2025," Swiss Re said in a new report.
According to the report, personal cyber insurance products commonly provide protection against financial fraud and identity theft, and allow policyholders to claim back the price they paid for goods bought online which are either not delivered, damaged during delivery or wrongly delivered. Some products also provide cover against cyber extortion and the costs of IT specialists removing malware from devices and restoring compromised data, it said.
Swiss Re said, though, that there are gaps in the coverage provided by some existing personal cyber insurance products.
"For the most part, existing personal cyber insurance policies tend to offer first-party covers, to mitigate against financial loss in the event of a cybersecurity problem," Swiss Re said. "Few products provide cyber third-party coverage to protect individuals against liability claims, which they might be exposed to because of their actions or inactions in the digital world. This might include inadvertently forwarding a contaminated email and infecting somebody else’s computer with malware."
Swiss Re surveyed consumers to find out how willing they are to buy personal cyber insurance. It found that 56% of respondents would buy such products, and that there was a preference to do so alongside other insurance products, such as home, motor or health insurance.
The research also identified opportunities for insurers to provide additional services alongside personal cyber insurance products.
Swiss Re said: "Anyone caught up in a cyberattack that has involved some sort of financial loss will want their cover to reimburse them. That level of cover is probably going to be regarded as the bare minimum. However, many people will not be able to deal with the complexity of the fallout from a cyber attack alone but need hands-on assistance. Conceivably, that could include the provision of technical help, access to legal support, and possibly psychological counselling too. The addition of features such as this will not only enhance the levels of cover, but will really help illustrate the value such personal cyber insurance policies represent."
Cyber risk and insurance expert Ian Birdsey of Pinsent Masons, the law firm behind Out-Law.com, said: "Individuals are increasingly recognising and seeking to protect their privacy rights. There is also greater awareness of the risks of cyber crime including identity theft and payment fraud, which can have a material financial impact on individuals if they are subject to a successful phishing attack where they have given up their banking credentials or paid into the wrong account."
"The fallout of any cyber incident is significant, and cyber insurers can offer customers access to experts at discounted rates and with preferential response times, which would be of great value when dealing with an incident. The personal lines market is likely to follow the same trajectory as the commercial lines market, where initially cyber extensions are offered as part of existing products such as home or motor insurance," he said.