As the cyber insurance market has continued its rapid growth, its loss vulnerabilities have become increasingly clear.
A new report from Guy Carpenter and CyberCube Analytics has identified potential loss scenarios in the current market that run in the billions of dollars. A long-lasting outage at a major cloud service provider could produce a $14.3 billion loss, for example, whereas a large-scale data loss could surpass $22 billion. Widespread data theft from one of the larger email service providers might generate a $19 billion loss, their report found.
The report, “Looking Beyond the Clouds: A U.S. Cyber Insurance Industry Catastrophe Loss Study,” examines key drivers of cyber catastrophe scenarios and provides a data-driven view on the potential insured loss figures for the standalone cyber insurance market. It also highlights particular vulnerabilities that could be exploited to execute a cyberattack and explores the volatility around the frequency and severity of those attacks.
Robert Bentley, CEO, Global Strategic Advisory at Guy Carpenter, said in prepared remarks that the report points to a greater need for insurers and reinsurers to “develop a much more granular understanding of the potential impact of systemic events.” He urged the industry to carry out more work similar to what Guy Carpenter has done with CyberCube to help reinsurers and insurers “make sound and informed risk tolerance decisions and help create a cyber market sufficiently robust to withstand these catastrophic events.”
Pascal Milliare, CyberCube’s CEO, offered a similar endorsement of using better data and enhanced analytics in order for carriers to adequately prepare for cyber insurance loss risks.