Cyber insurance will take off in Australia in the next three to five years, says Antoinette Amputch.
Cyber insurance (CI) will take off in Australia in the next three to five years, says Antoinette Amputch, a Willis Australia broker who specialises in cyber risks. “It will be a slow process, but it's like directors' & officers' or pollution insurance. People did not think they were necessary either.”
She said Australian companies have not yet conceptualised the impact cyber risks could have on their businesses. IT users, unlike companies in the IT industry, did not consider the potential cost of systems being hacked into or attacked by computer viruses. “They can spend A$5m on an [IT system and network] and not think it is worth insuring against cyber damage,” Amputch said.
The perception that CI is expensive is prevalent and the insurance industry needs to educate Australian businesses on the potential cost of cyber attacks. “The risk is always a moving target. It's not like your traditional fire risk. It's hard to price for, but CI is not cost prohibitive anymore,” Amputch said.
Reinsurance was widely available for IT companies, but not IT users, she said. “For IT companies we can get reinsurance through Swiss Re, Gen Re and Lloyd's.” But she was confident reinsurance would be more widely available when more insurers were writing the cover. “It's only a matter of time.”
Bosco Tan, Sift Information Security Services researcher, said CI could solve the problem of high IT security costs for Australian businesses. He blamed CI's low take-up on a “lack of incentive” for insurers to offer the product and a lack of domestic reinsurance support.
While some domestic insurers, like QBE, offer reinsurance for CI, “there isn't an organisation the size of Munich Re, Swiss Re or Lloyd's here”. Tan said reinsurers contributed research, predicted trends and compiled global data. Domestic reinsurer support would increase the visibility of cyber risks and awareness of the need for protection. “The reason CI products have found favour in Europe and North America is attributable not only to the size of the economies, but the location of our largest global reinsurers.”