Cyber insurance expansion challenged by exposure limits

Industry insiders cited risk assessment as the biggest concern.

The rapid growth of cyber insurance has made insurers cautious about overexposure due to challenges in assessing risk, managing claims, and the lack of historical data, according to GlobalData. 

Industry insiders cited risk assessment as the biggest concern in offering cyber insurance, followed by the difficulty of limiting exposure, as a single cyberattack could impact multiple policyholders simultaneously.  

Ben Carey-Evans, senior insurance analyst at GlobalData, noted that unlike traditional insurance lines, cyber insurance does not allow insurers to limit coverage to specific high-risk areas. 

“This creates a difficult balance between trying to increase penetration rates and grow the product and trying to keep premiums down to attract customers as the level of risk continues to rise,” Carey-Evans said.

Carey-Evans said that whilst insurers will gain more historical data over time, the risks will continue to escalate as cyber threats become more advanced. 

He added that insurers must demonstrate the value of cyber coverage to businesses and develop tailored policies to meet their needs.