PwC says available policies do not adequately cover against cyber attacks
The limited protection offered by cyber insurers has led to a decrease in the number of UK firms taking out cyber cover, according to PwC.
PwC interviewed executives at 479 British companies and found that only 38% had a cyber insurance policy in place, down from 59% last year.
PwC explained that whilst cyber is one of the biggest risks facing businesses, insurers still tread carefully and limit the amount covered under each policy.
Its study found that the cyber policies currently available do not come close to cover the potential losses seen from a truly damaging cyber-attack.
So instead of purchasing insurance, UK companies have doubled their security budgets.
Firms now spend around £6.2m on security.
PwC insurance director Domenico del Re said: “The drop in take-up of cyber insurance shows that this is still maturing as a product. Companies do not see the cover currently on offer as targeted to their individual risks and therefore not value for money.
“The successful insurer will be one who can handle the technical detail, understand how investment in cyber security reduces the vulnerability of companies, and measure the residual risk. An increase in cyber cover sales will surely follow.”
UK businesses were also more likely than the rest of the world to not share security knowledge.
Only 40% collaborate with others to reduce future risks, compared to 52% across Europe and 55% globally.
PwC associate director Marta Abramska commented: “Cyber risk is a new challenge for all companies, including insurers, and the understanding of claims that are likely to arise from an extreme cyber event is in its infancy.
”The historical data available on cyber attacks is scarce, which impacts the selection of risk modelling techniques available to the insurance industry. Furthermore, any methods are in constant threat of becoming redundant as the cyber risk landscape – and the weapons used - continuously evolves.
“In order to keep pace with society’s demands, it is vital for insurers to lead the way in offering protection for companies. It is also important to develop the right expertise and tools to manage this risk with confidence.”