It is already a booming market in the US, but in Europe, companies are also waking up to the idea of cyberinsurance to protect themselves against Internet attack.
Insurance companies are projecting strong growth in the coming years.
On the other side of the Atlantic, where companies are obliged to inform US authorities of online attacks, the cyberinsurance market is already highly developed, totaling US$1.3 billion per year, according to Allianz Global corporate and specialty head of Germany and central Europe Christopher Lohmann.
Europe is still a long way off that.
“But we project strong growth in the coming years. We see the market amounting to 700 million to 900 million euros [US$947 million to US$1.22 billion] by 2018,” Lohmann said.
For companies and private individuals, the dangers from the Web are very real, ranging from data and identity theft to espionage.
Companies can see their infrastructure paralyzed, their computer systems infected with viruses and malware.
However, these are not the only risks: Human error and internal hiccups can also jam systems and wipe data.
Just last month, mobile phone operator Vodafone was the victim of massive data theft where personal information — including bank account details — of about 2 million people was stolen.
And with the exponential growth of electronic messages, and the increasing transfer of companies’ commercial processing and data storage to cloud computing, the dangers are only going to multiply.
In Germany, a total of 64,000 acts of cybercrime were officially reported last year, representing about 42 million euros worth of damage, an increase of 7.5 percent over the previous year.
And that is just the tip of the iceberg, because many companies prefer to remain silent over any breaches in their security systems, experts said.
“Europe is still very much behind on this,” NeoTech Assurances founder Nicolas Helenon said.
“Big companies armed themselves against these risks long ago. But most small and mid-sized companies are not insured,” Helenon said, arguing that many businesses found cyberrisks more difficult to grasp than, say, fire or water damage.
“The threat of cybercrime is primarily a concern for companies who manage a lot of client data,” HDI Gerling’s Philipp Lienau said.
“In case of an attack by hackers or data theft, it can be they who can be held responsible. However, above all, it’s a major cost factor. Informing those affected by any cyberattack can be very costly,” Lienau said.
It can also seriously damage a company’s reputation.
German’s Allianz launched an insurance against all types of online risks to companies in July. HDI Gerling, a subsidiary of the Talanx group, followed suit, offering tailor-made products to industry starting this month. French giant Axa is scheduled to enter the market at the beginning of next month, while Zurich Insurance has been offering such policies to small to medium sized enterprises (SMEs) for a year now.
New legislation will come into effect in Europe, requiring companies to report cyberattacks and abide by tougher data protection rules.
And that will boost demand for cyberinsurance, experts said.
It is not only companies that are at risk, but the general public too as use of social media, smartphones and online transactions rises exponentially.
In 2011, insurer Swiss Life launched an e-reputation insurance to protect individuals’ online reputation.