The U.S. property/casualty insurance industry generated $1 billion in direct written premium volume for cyber insurance in 2015. American International Group (AIG), Chubb and XL Group led the market, according to Fitch Ratings.
AIG carried about 22 percent of the cyber insurance market, Fitch said, followed by Chubb at 12 percent and then XL Group (XL Catlin) at 11 percent.
Cyber insurance has been a fast-evolving market as the risks change. But Fitch said the coverage “represents a significant growth opportunity for P/C insurers.” Even so, knowledge gaps remain in terms of the risks and adequate coverage needs/design, noted Managing Director James Auden.
“Industry estimates suggest that the global cyber insurance business could increase to $20 billion by 2020, but the lack of information on cyber insurance is a challenge for insurance companies, policyholders, regulators and investors to evaluate and price risk,” Auden said. “Challenges in isolating cyber-related premiums and exposures from other risks within a package policy creates limitations in analyzing the supplemental filing as total cyber insurance premiums are likely understated.”
What also remains unknown is the profitability of cyber insurance. “The ultimate profitability of the P/C industry’s cyber insurance efforts will take some time to assess as the market matures and future cyber-related loss events emerge,” said Gerry Glombicki, director, Fitch Ratings.
Fitch will track premium volume and loss ratios to gauge cyber insurance market performance and company activity.
(Editor’s Note: The Fitch report aggregates statutory data for the U.S. P/C insurance industry from a special annual statement supplement called the “Cybersecurity And Identity Theft Insurance Coverage Supplement.” Industry estimates of future growth cited in the report refer to the global cyber insurance market.)