U.S. insurers wrote an estimated US$1 billion worth of cybersecurity coverage in 2015, according to a report released by Fitch Ratings on Wednesday.
Approximately 120 insurance groups reported writing approximately US$1 billion in cyber coverage in 2015, the Fitch report notes. The largest players, according to Fitch’s analysis, are American International Group, Inc. (AIG), which accounts for about 22% of the market, Chubb Limited with 12%, and XL Group Ltd. at 11%.
Cyber-related insurance coverage is expected to represent a significant growth opportunity for insurers, the report says.
Industry estimates suggest that the global cyber insurance business could increase to US$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,” says James Auden, managing director at Fitch, in a statement.
The actual volume of cyber-related coverage is likely understated, the Fitch report notes, as it can be difficult to isolate the cyber premiums and exposures within packaged policies.
The industry’s direct loss ratio for cyber stand-alone business in 2015 was 65.2%, according to the report.
“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,” adds Gerry Glombicki, director at Fitch, in a statement.