August 24, 2016 / 4:55 PM / 3 years ago

Fitch: U.S. Cyber Insurance Premiums Total $1B Per New Supplemental Filing

(The following statement was released by the rating agency) CHICAGO, August 24 (Fitch) Aggregating the cybersecurity statutory supplement data for the U.S. property/casualty (P/C) insurance industry finds that approximately 120 insurance groups reported writing cyber coverage in 2015 totaling approximately $1 billion in direct written premiums volume. Fitch analyzed cyber insurance market share and performance in a new special report, 'U.S. Cyber Insurance Market Share and Performance' that analyzes data from a new 2015 statutory supplement to compile company and industry statistics on cyber insurance. The largest writers according to Fitch's analysis are American International Group, Inc. (AIG), accounting for approximately 22% of the market, Chubb Limited (CB) at 12%, and XL Group Ltd. (XL) at 11%. Cyber-related insurance coverage represents a significant growth opportunity for P/C insurers. Insurance broker Marsh & McLennan Companies, Inc. (MMC) estimated that in 2014 the global insurance market wrote approximately $2 billion in cyber insurance premiums, which could multiply by a magnitude of three to five times by 2020. "Industry estimates suggest that the global cyber insurance business could increase to $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," said James Auden, Managing Director, Fitch Ratings. "Challenges in isolating cyber related premiums and exposures from other risks within a package policy create limitations in analyzing the supplemental filing as total cyber insurance premiums are likely understated." The nature of the new supplemental data filing leads to more limited information regarding underwriting results from cyber business, as information is provided solely on a direct basis and does not include information for incurred losses net of reinsurance and underwriting expenses. The P/C industry's direct loss ratio for cyber stand-alone business in 2015 was 65.2%. "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," said Gerry Glombicki, Director, Fitch Ratings. Fitch will track premium volume and loss ratios over time under this new supplement to gauge the performance of the cyber insurance market and activity of individual companies. The report 'Cyber Insurance Market Share and Performance' is available at www.fitchratings.com or by clicking on the link. Contact: James Auden, CFA Managing Director +1-312-368-3146 Fitch Ratings, Inc. 70 West Madison St. Chicago, IL 60602 Gerald B. Glombicki, CPA Director +1-312-606-2354 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: hannah.james@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Related Research U.S. Cyber Insurance Market Share and Performance here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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