Asian companies are still playing catch-up when it comes to cyber risk management, with many not having the fundamentals in place, said Lloyd’s CEO Inga Beale at the recent Lloyd’s Asia Cyber Risk Seminar held in Singapore.
The region’s risk managers understand tangible risks well enough but evaluating threats like business interruption and reputation impact, which come with cyber breaches, is much more difficult. At the same time, pressure on companies to deal with cyber threats is intensifying.
“One of the things that’s holding companies back from purchasing cyber insurance isn’t not recognising that cyber is a risk for them, but not recognising what insurance can do,” she said. However, she noted that APAC is seeing growth in cyber insurance purchase. While it was from a low base, Lloyd’s cyber business tripled last year. She expects demand to accelerate.
Lloyd’s launched 15 new cyber products last year and up to 77 of its over 80 syndicates plan to write cyber. Ms Beale estimated that cyber premiums this year will amount to over US$1 billion for Lloyd’s, which is a 40% increase over last year.
Rating agencies likely to take cyber incidents into ratings assessments
She also said there were increasing signs that cyber incidents may have an impact on how ratings agencies assess one’s business, and adjust credit ratings downwards based on knowledge of damaging cyber incidents such as data theft and loss.
First billion-dollar cyber placement to come
Mr Paul Bantick, UK focus group leader for technology, media and business services at Beazley, which writes about half of Lloyd’s cyber premiums, believes growth is going to continue for cyber as a standalone product, and will be driven by Asia.
“I don’t think we’re very far away from the first billion-dollar cyber placement. Clients are buying more coverage and we’ve already seen $500-600 million being purchased,” he said. A