The cost of cyber attacks and data breaches can no longer be ignored by the insurance market, according to one cyber risk expert.
Ian Birdsey of international law firm Pinsent Masons made the comments after PwC published a report revealing that the global cyber insurance market could triple in size by 2020, from $2.5 billion to $7.5bn.
He said that as more insurers exclude cyber risk from their general liability and professional indemnity policies, businesses are being forced to buy separate cyber cover.
Birdsey said: “To see how the global cyber insurance market could grow, you need only look at the experience in the US and Canada, where the growth of the market has been boosted by a number of high-profile data breaches brought to prominence under US state notification laws.
“There is an obvious parallel to draw here with the EU's new data protection regulation, which will introduce similar reporting requirements.”
With the potential cost of data breaches topping the hundreds of millions or even billion pound mark, Birdsey said that businesses have reached the point where ‘transferring the risk to an insurer makes commercial sense’.
Paul Delbridge, insurance expert at PwC, said that cyber risk was ‘a risk like no other’ to insurers, yet it was ‘equally an opportunity’.