The firm has grown at a phenomenal pace of 40% compounded annual growth since 2011 and is expected to quicken its pace.
The head of Travelers Cos Inc stated the company will stick to its growth plans on the cyber insurance, which protects businesses against liabilities revolving around hacking and cyber attacks.
We feel like we’re just in the right spot,” said Thomas Kunkel, Travelers Cos’ president of bond and specialty insurance during an investor meeting in Connecticut.
The pace of sales at its cyber insurance business has grown at a 40% compound annual rate since 2011. Kunkel said “It would not be hard,” to quicken the pace. However, it must be “respectful and prudent” on the potential risks involved, said Kunkel.
According to insurers, with the ever evolving sophistication of hacking attacks and with the cyber insurance industry being in its infancy, makes it challenging for them to quantify potential cyber-related losses.
According to Kunkel, around three-quarters of Travelers’ cyber policies cover up to $1 million in damages, while nearly another quarter covers between $1 million and $5 million.
“We manage our limits very closely,” said Kunkel.
Widespread hacking attacks have largely driven the demand for cyber insurance, particularly in the financial services sector, said Fitch Ratings in a report.
“As the cyber insurance market develops, competition is likely to erode profit margins,” said Fitch.
According to Fitch, new entrants to the cyber market may lack underwriting experience and are likely to take on risks that could exceed their capital.
Events that could trigger cyber insurance claims include, large cyber attacks on the transportation system or on systemic infrastructure, or hacks on large data storage, said Fitch.
On October 26, the American International Group had stated it was reviewing all types of its insurance coverage to gauge its exposure to risks. The firm is slated to provide cyber coverage as part of its commercial insurance during the first quarter of 2018, said Tracie Grella, global head of AIG’s cyber risk insurance.