Reporting by Jonathan Gould and Andreas Kroener, editing by William Hardy
The rising number of hacking attacks is prompting more companies in Germany to seek cyber insurance protection, insurance broker Marsh said on Tuesday.
While cyber premiums in Germany are expected to be worth only around $10 million this year – compared with $2 billion in the United States – the German market is expected to grow by 30 percent per year in the future, Marsh estimated.
“We are seeing a wave of enquiries that will lead to many more contracts in the coming months,” the head of Marsh’s German business Georg Braeuchle told a news briefing.
Many insurers see cyber as a key growth area at a time when premiums in other types of insurance are under pressure due to chronic over supply of insurance availability.
However, insurers are also advancing cautiously and will not cover all the losses a company could face from a cyber attack.
Marsh has brokered 46 contracts so far this year in Germany, compared with 20 in all of 2014, with industrial espionage and hacking attacks – such as one that forced the German parliament to switch off its entire computer system – helping to raise awareness.
“People are more conscious of the vulnerability of their own IT departments,” Braeuchle said, pointing out that interest was coming not just from online companies but also manufacturers, banks and health care providers.
Around 15 insurers are active in the German market, including Allianz, Axa, Hiscox, Ace , AIG, Talanx, Munich Re, XL Catlin and Zurich, allowing individual clients to take out up to 500 million euros ($562 million)in cyber risk cover.
Cyber insurance is still finding its feet in Germany, with buyers and sellers working to get to grips with pricing and risk, but at least one damage claim of nearly 100,000 euros has been paid already in a telephone hacking incident, Marsh said, without giving details.
Credit rating agency Standard & Poor’s on Tuesday said it would not look favourably on banks that relied solely on cyber insurance as protection against hacking.
“We view weak cyber security as an emerging threat that has the potential to pose a higher risk to financial firms in the future, and possibly result in downgrades,” Standard & Poor’s said. ($1 = 0.8897 euros)