Growing cyber market presents both opportunities and risks, reports PwC

PwC has reported that although cyber re/insurance remains a rapidly growing, fertile sector for re/insurers, there are also significant risks and downside potential to writing this business, such as limitations in historical data and uncertainties in accumulation risk.

Companies are becoming increasingly aware of potential cyber threats and associated risk mitigation and cyber security techniques, largely due to high-profile cyber-attacks over the last year, which have become increasingly sophisticated and aggressive.

The current U.S standalone cyber re/insurance market is estimated at around $2.5 – $3.5 billion annually, and, if the current climate persists, is expected to grow by another $2 billion per year over the next three years.

In a recent survey of specialist writers active in the cyber markets, PwC also found that over 75% of companies are currently transferring risk to reinsurers to manage the growth of their cyber exposures.

The cyber market has also seen an influx of new entrants due to market-wide favourable combined ultimate loss ratios, which has created additional capacity and led to a softening market, in which PwC has observed increasing overall…