Cyber insurance payout rates at 99%, but uptake still far too low
The Association of British Insurers has, for the first time, revealed that 99% of claims made (207) on ABI-member cyber insurance policies in 2018 were paid. This is one of the highest claims acceptance rates across all insurance products.
Despite this, the take-up rate of cyber insurance by businesses in the UK is still worryingly low, with the overall market size estimated at less than a tenth of the size of the UK’s pet insurance market*.
Just 11% of businesses are thought to have a specific cyber insurance policy in place, meaning millions of small businesses could be at risk.
The UK has the potential to be a world leader in cyber insurance, but the inability to access raw breach data risks limiting the potential of the market. The ABI has been asking the Information Commissioner’s Office (ICO) to make anonymised cyber breach data publicly available, which would enable insurers to price risk more accurately and manage exposure more effectively by feeding this data directly into their modelling. Ultimately this would make cyber insurance more widely available, more accurately priced and better tailored to each business.
Unfortunately, the ICO has yet to agree. The ABI will continue to work with the ICO to find a solution that enables both innovation and data privacy in the Cyber market.
James Dalton, the ABI’s Director of General Insurance Policy, commented:
“Cyber insurance is a valuable product – the claims acceptance rates speak for themselves and the additional support a business receives, beyond dealing with the pure financial losses is a key attribute of most cyber insurance policies, too often overlooked.
“Data is key to insurers’ ability to better understand and more accurately price cyber risk. We need the ICO to work with us to find what data can be shared to help insurers provide more cover to the many businesses that need it in this digital age."
Cyber cover provides extensive services focused on preventing a breach from occurring in the first place, as well as helping with the recovery and management of costs associated with an attack. Recent high-profile cases of cyber breaches have included British Airways and Marriott International, which highlight just how important this type of cover is.
* Recent estimates suggest that there is $3.5 billion worth of cyber premium underwritten around the world – 85% of which is thought to be US risk. The ABI estimates that less than £100 million (approx. £80 million in 2017) is for UK risk, whilst the UK pet insurance market is more than £1.1 billion in size.