Large insurance companies such as Zurich and Marsh are urging governments to provide government support to help mitigate cyber risks.

In a joint report, the two companies pointed to the limitations on the size of losses that the private sector can insure, especially with the possibility of being exposed to a massive blow in the event of a major cyber incident affecting infrastructure.

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According to the Financial Times, one of the recommendations made by Zurich and Marsh is to create loss-sharing schemes, something we have already seen in areas such as floods and terrorism. It was highlighted that such public-private collaborations would help cover cyber risks that are considered uninsurable.

The proposal comes in light of findings by Zurich and Marsh that traditional insurance and risk management approaches are no longer able to fully mitigate cyber threats.

“At some point, cyber events could become large enough to move beyond the insurance sector and become societal,” Tom Regan, global cybersecurity practice leader at Marsh, told the Financial Times.

For Zurich Commercial Insurance CEO Sierra Signorelli, securing government support means “more certainty about coverage,” with the public sector absorbing private losses in addition to what insurers cover.

In Canada, while cyber liability premiums have risen from about $18 million in 2015 to about $550 million in 2023, the company’s financial results indicate that claims are outpacing premium growth.

According to the Insurance Bureau of Canada, insurers averaged a combined insurance ratio of 153% from 2019 to 2023, meaning they paid out $1.53 in claims and operating expenses for every dollar earned in premiums.

Globally, according to Insuramore, UK-headquartered Beazley is the largest cyber insurance underwriter based on gross direct premiums written in 2023. Chubb and Munich Re came in second and third, respectively.

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