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The Actuary The magazine of the Institute & Faculty of Actuaries

UK firms ahead of the curve for cyber insurance uptake

The number of UK businesses with cyber insurance has increased from around two in three to a whopping nine in ten over the last year, with uptake much higher than in many other countries.

Cyber security insurance has become a must-have ©iStock
Cyber security insurance has become a must-have ©iStock

That is according to new research by Ovum, which shows that a quarter of firms in the US, Canada, Brazil, Mexico, Germany, India, Finland, Norway, Sweden and South Africa remain without coverage.

However, it was also found that just 38% of UK companies have insurance that covers all cyber threats, with most policies based on inaccurate risk assessments.

“There is still some way to go for these firms to have a broad view of their security posture and how to present it for insurance,” Ovum research director, Maxine Holt, said.

“It could also show that these companies have a current security posture that insurers are not prepared to cover comprehensively.”

The research is based on a global survey of businesses with more than 500 staff, and was commissioned by Silicon Valley analytics firm FICO.

It was found that far more UK companies expect to increase their cyber security than last year, rising from 48% to 64%, with financial services firms raising their budget most.

Despite the recent introduction of General Data Protection Regulation (GDPR), it was found that just 19% of businesses see privacy regulation as the major driver of cyber investment.

Increases in cyber attacks and pressure from customers or investors are the top two reasons for firms looking to increase their cyber insurance coverage.

Of the sectors studied, power and utilities companies were particularly sceptical about how premiums are calculated – over half said they don’t believe they reflect their risk profile.

“Cyber security insurance has become a must-have for UK firms in a short period of time,” said Steve Hadaway, FICO general manager for Europe, the Middle East and Africa. 

“But with growth will come increased pressure on insurers to increase transparency and fairness. Businesses will demand that their investments in cyber security drive premiums down.” 

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