Insurance insiders believe that cyber risk is the biggest threat to the industry, surpassing major global themes such as natural catastrophes and political risk, according to a poll by GlobalData. While macroeconomic and supply chain issues are very topical at the moment and are impacting pricing, experts believe these issues will subside.

GlobalData ran a poll across Verdict Media’s insurance business websites and found that over a third of respondents expect cyber risk to be the leading threat over the next three years. The rise of cyberattacks since the Covid-19 pandemic has raised the threat level; with companies around the world holding more and more personal data, most businesses are vulnerable to attacks.

The fallout for businesses can be particularly severe. Within the EU, GDPR (passed in 2016) has resulted in large fines for businesses that fall victim to cyberattacks. The reputational damage on top of that is also extremely costly, as customers will not use businesses they do not trust. These factors place great emphasis on prevention. Insurers must go beyond traditional policies and focus on proactive risk management, including monitoring and training, to keep businesses safe from the threat.

A further poll question found that personal cyber insurance was considered to be the biggest opportunity for insurers over the next three years. This emphasises how impactful insurance insiders believe cyber to be. While personal cyber cover is a relatively niche and HNW policy at present, as younger generations increase their online presence and have more and more personal information stored online, protection will become more important. Therefore, cyber presents a vast threat but also an opportunity for insurers. It is a very difficult line to price and make affordable, which increases the challenge for insurers and deters many businesses from purchasing it. Insurers will need to convince businesses they can protect them against the ever-increasing level of cyber threat and therefore become an essential part of their day-to-day operations.

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