What makes an efficient cyber insurance market?
What makes an efficient cyber insurance market? | Insurance Business America
Cyber
What makes an efficient cyber insurance market?
New research delves into the data and trends that drive the sector
The American Property Casualty Insurance Association (APCIA), in collaboration with CyberAcuView, has unveiled a new research paper that presents a comprehensive analysis of data and trends in the cyber insurance market, exploring the challenges it faces, changes in underwriting practices, and the ongoing evolution of cyber insurance in a rapidly changing technological landscape.
Titled “Elements of an Efficient Cyber Insurance Market,” this paper highlights that cyber risks are continuously evolving threats, underscoring the importance of an efficient market for cyber insurance products to meet consumer demands. APCIA director of cyber and counsel Shelby Schoensee said that as the cyber insurance market is still developing, it requires time to mature and sustain its growth.
A gradually maturing market
The report found that the cyber insurance market is gradually maturing, benefiting from access to experience data, stronger underwriting processes, capital market investments, collaboration with law enforcement and related security agencies to combat cybercrime, and initiatives addressing systemic risks to benefit both policyholders and society.
It also underscored that an efficient cyber insurance marketplace thrives on consistency and an appropriate level of regulatory flexibility that does not overly burden insurers when adapting to changing consumer needs, expectations, and risks.
With these in mind, Insurance regulation should promote informed consumer choice, ensure solvency oversight, and curb fraud and deceptive practices across the marketplace, the report said. Efficiency and market competition should also empower consumers by offering pricing and policy coverage options.
“All stakeholders benefit from reasonable, necessary, and clear regulation,” Schoensee said. “To the extent that regulations are necessary, a predictable and consistent regulatory and legal environment must exist that offers flexibility and a level playing field for all stakeholders.”
The demand for cyber insurance in the United States is continuously growing and is expected to double annually in the foreseeable future, with ransomware attacks currently one of the most prominent cyber threats.
While insurance, particularly ransomware coverage, can enhance resilience, it cannot eliminate the criminal behavior perpetuating ransomware issues, the report stated. Consumers should be more vigilant about cyber risks and their impact on individual businesses and their partners.
“To ensure commensurate development of available insurance solutions to manage emerging cyber risks, the market should be allowed to evolve and grow responsibly. Experience, innovation, and collaboration will show how far the private sector can take the cyber market for the benefit of all interested parties,” Schoensee said.
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