Demand for cyber insurance in Singapore to grow by 50% in 2016 – AIG

An insurer has predicted that Singapore’s cyber insurance market will grow by 50% this year as more businesses look to mitigate the reputational and financial risks associated with cyber breaches.

According to AIG, only 9% of publicly listed companies in Asia are covered by cyber insurance.

But AIG Singapore head of financial lines Lai Yen Yen said the local branch had seen a seven-fold increase in inquiries about cyber insurance policies over the past three years.

“We predict this strong demand from Singapore companies will continue over the next five years,” Lai said.

“Based on what we have observed, less than 10% of Singapore companies hold such insurance, but we forecast that the number of companies taking up cyber insurance will accelerate to 40% by 2020.”

AIG Singapore expects strong demand for cyber insurance to continue to come from finance and technology companies, and new demand to emerge from healthcare companies.

The insurer also forecasts cyber risks in 2016 to range from both internal and external factors, including lack of data encryption, increased use of malware, and outsourcing to third party providers.

“Not only do data leaks result in financial losses including compensation payouts and regulatory investigation, but reputational damage and loss of consumer confidence can also have a long-term impact on a company’s bottom line,” said Lai.

“Our research in 2014 showed that 42% of companies were concerned about loss of reputation, and 33% were concerned about protecting against financial loss.”