Cyber hacking and other technological related crimes are on the rise in Hong Kong. The government and the business sectors…
The need for cyber insurance has grown especially with the business shifts that occurred due to the pandemic. Remote work and the increasing technological and operational demands of businesses has also highlighted the importance of insurance for any type of business.
Given the current state of Asia (and the world), here are our predictions for the next five years for insurers as well as businesses in terms of managing cybersecurity.
Immense industry growth is ahead.
Most if not all businesses agree that there will be an increase in cyber insurance premiums. Standard & Poor’s Corp. stated that they foresee an increase of 20% to 30% per year on average in cybersecurity premiums.
The recent hacking at Colonial Pipeline resulting in a US$4.4 million ransom makes a strong case for companies to revisit and evaluate their current online security and the lack of infrastructure in place to protect them from such breaches.
A Standardized Cyber Insurance Cover
Cyber insurance covers differ in limits, features, and terms. At the moment, these variations are not fully intentional and is a normal part of the industry’s process of learning and adapting. Having said that, this current state also poses challenges for policyholders who may not understand which policy they need for their business. It also results in issues for reinsurers in evaluating their exposure to varied risks.
We see a more stable outlook in 2025 with the language and terms used for cyber insurance. As the market hardens, policy providers have already avoided ambiguous terms that may result in confusion for the insured.
In addition, regulations for cyber insurance will be more mature and regulatory bodies will enforce higher standards of information collection and will require regular reporting about cyber risk exposure.
Flexible Policies As the Norm
COVID-19 has taught many providers that rigidity and failure to adapt can do plenty of damage. As a solution to the current and very likely future events, we predict policies that offer monthly premiums or credit plans for add-on features based on regular reevaluated risks as well as incentives for taking preventative actions.
Cyber Insurance Providers Will Have Dedicated Cyber Risk-driven Models
Hackers will continuously find more and more ways to breach systems alongside the efforts to reduce cyber attacks. This means more complicated and highly dynamic risk assessment models for insurance providers in the foreseeable future.
A huge cyberattack is always impending and it can very well happen before 2025. Knowing this reality, we foresee providers investing in dedicated talents who specialize in cybersecurity to provide comprehensive risk models.
Companies worldwide have now been propelled to enter and quickly grasp a fast-moving and highly digitized facet of business transactions.
Alternative and cyber insurance products will become more interesting, flexible, and specialized. The task at hand for insurance providers is to innovate and design the right products to bridge market gaps that leave businesses exposed to the next attack.
Need help finding the right insurance plan for your business in Hong Kong? Contact us today.