Cyber liability insurance is a newly-established category in the UK, estimated by the industry to represent GBP3-4 million, or just 0.01% of the country's non-life gross written premiums.
A large potential market exists, with an estimated 4.8 million private businesses in the UK.
As more business is increasingly conducted online, more personal and financial information is exchanged using the internet.
Cyber attacks and hacking could potentially result in customer identity theft and, consequently, financial loss for a company, placing liability on the business.
Cyber liability insurance has become increasingly attractive to companies seeking protection against financial losses from legal issues stemming from data breaches.
Developments in the use of information technology for business have raised the issue of liability in cyberspace. Firms collect, manage and store data electronically, social media interaction has increased and portable computing devices are growing in popularity.
Particularly, e-commerce and online auctions have increased demand for industry services during the five years to 2013, as these online retailers seem to fall victim to cyber security attacks most often.
A number of high-profile data leaks during 2011 and 2012 highlighted the costs involved when personal data is exposed; the monetary costs of launching an investigation and compensation payouts, as well as costs which are more difficult for underwriters to quantify, such as damage to reputation all have to be taken into consideration.
Industry surveys suggest that firms are unaware of cyber liability products. It is likely that managers believe these intangible risks are covered by their existing commercial liability insurance policies, but traditional policies do not tend to address issues related to the internet or electronic data.
For more information on the UK cyber liability insurance market, see the latest research: UK Cyber Liability Insurance Market
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