(Reuters) - New European legislation on data privacy is helping push up regional demand for cyber insurance, industry specialists say, after companies such as TalkTalk and Experian were affected by hackers earlier this year.
The European Union agreed this week to change fragmented data protection laws, forcing companies to report breaches likely to harm individuals to national authorities within 72 hours.
Up until now, insurers say many European companies have swept the issue under the carpet and shown little interest in cyber cover. But anticipation of the European law has already boosted demand, according to Paul Bantick, technology, media & business services UK focus group leader at insurer Beazley.
“We have seen clients buying policies because they know that this is coming,” Bantick said. “Breaches are going to get more expensive, they are going to get more complex and they (clients) want insurers to help with both of those issues.”
The development of the U.S. cyber insurance market is an indication of possible trends in Europe, where big players in cyber insurance also include Axa, Hiscox, Ergo (part of Munich Re MUVGn.DE) and Zurich Insurance.
The U.S. market has grown by more than a third this year, with gross written premiums totaling $2.75 billion, according to The Betterley Report, a survey of the cyber insurance market.
Most U.S. states have introduced legislation requiring companies to notify individuals of security breaches of personal information, with the first law enacted in 2002. Before that, almost no cyber insurance was written, a situation similar to the current state of play in Europe.
In Germany for instance the market is only expected to total $10 million this year, while in Britain the market only totaled between 20 million pounds ($30 million) and 25 million in premiums last year, according to brokerage Marsh.
That low takeup is already changing.
Stephen Ridley, senior development underwriter at Hiscox UK, estimated the UK market has at least tripled this year and noted the Lloyd’s of London [LOL.UL] underwriter has seen demand increase month by month.
Ridley expects this to continue in 2016, boosted in part by media coverage of the high profile data breaches that have hit UK-based companies.
Globally cyber insurance market could double to $5 billion in annual premiums by 2018 and reach at least $7.5 billion by the end of the decade, according to a report by PwC.
Julia Graham, technical director at Airmic, a UK-based trade body for company risk managers, also said there were signs of increasing demand, particularly from industries most aware of the threat.
“There is a small but perceptible increase,” Graham said. “The sectors that are more sophisticated - financial services, law, tech companies, pharma companies - those are the early entrants.”
Reporting by Noor Zainab Hussain in Bengaluru and Carolyn Cohn In London; Additional reporting by Jonathan Gould; Editing by David Holmes
Our Standards: The Thomson Reuters Trust Principles.