German cyber market set for take-off as buyers seek €500m of cover

Large German companies are now looking for cyber cover of up to €500m as demand grows, according to experts from the insurance industry. Andreas Berger, member of the management board at German industrial insurer Allianz Global Corporate & Specialty (AGCS), said the €500m figure is now sought by some large German firms. “We are seeing increased demand, which is also being reflected in the policies written,” Mr Berger said. Growth rates in the cyber segment are very good, he added. Buyers must use towers of insurance provided by a number of insurers to obtain the higher limits demanded by some German firms. AGCS alone offers cover of up to €100m. It is one of the leading providers of cyber policies for larger German companies, along with others such as AIG, Zurich, HDI Global and Munich Re. The increased interest in cyber protection from large corporations could mark the long-awaited turning point in the German cyber market. Currently, the market is still quite small with premium income estimated at between €60m and €80m in 2016. A number of insurers have been offering cyber policies for about three years in Germany, without much success. Now, it seems, their efforts may be about to be rewarded. Johannes Behrends, who leads the cyber department at broker Aon in Germany, is convinced that now is the time for growth in the cyber market. “Companies that told us a year ago they were not interested in cyber cover are now getting in touch again,” he said. He expects to see the segment’s premium volume double by the end of this year. Others are equally bullish. Jörg Wälder of consultant and accountancy firm KPMG is counting on rapid growth in this line of business. By the end of 2019, the German cyberinsurance market could reach premium volume of €400m, he predicts. Mr Wälder believes the biggest push will come from large companies. It is among these firms that supervisory boards are increasingly addressing the topic. In the long run, however, the makeup of the cyber market will be different, said Mr Wälder. “Retail customers and smaller companies will be responsible for the lion’s share of cyber premiums,” he explained. A major reason for the jump in demand for cyber cover is the recent wave of cyber incidents, particularly the WannaCry and Petya ransomware attacks. They affected big international corporations such as shipping and logistics conglomerate Maersk and US food giant Mondelez. Another catalyst could come from regulatory changes. Next year, the European Union’s General Data Protection Regulation will be implemented into German law. This could provide a boost for the German cyber market, said Lucas Beckmann, senior executive casualty for Germany, the Asia-Pacific region and Africa, at reinsurer Munich Re. The new rules include obligations to notify authorities about cyber breaches and potential fines much larger than those currently being handed out. Insurers are becoming increasingly worried about accumulation risks from cyber. Insurers should make sure they get on top of this, urged AGCS’s Mr Berger. Accumulation Worries “A global cyberattack could hit a multitude of our customers in one swoop, especially if infrastructure or communications were to be knocked out,” he warned. Risk analysis and portfolio management are therefore becoming increasingly important for insurers. For example, AGCS has set up a training programme that all of its cyber underwriters worldwide have to undertake.

German cyber market set for take-off as buyers seek €500m of cover

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