Demand Factors of Cyber Insurance

This report analyzes the demand factors and their impact on the market share of cyber insurance. It discusses the high cybercrime rate, GDPR act, digital payments, and IT security as driving factors. AXA's cyber insurance products and coverage are also highlighted.

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Introduction
Business insurance is a concept which protects a business form several losses which occur
in day to day business operations (Serpa, 2016). There are several types of business
insurance such as commercial vehicle insurance, Professional liability insurance, property
insurance, home based business, product liability insurance and vehicle insurance and cyber
insurance (Les, et al., 2011). Companies assess their business
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insurance requirements based on potential risk indulge in the environment in which a
company operates (Secretan, 2018).
AXA is an insurance service provider. The company is the French multinational insurance
company based in the 8th arrondissement of Paris which provides insurance services and
products also other financial services across the globe (AXA, 2018).
AXA's service of cyber insurance is most demandable in the market due to increased
demand for cybersecurity.
This report will analyse the demand factors and the impacts these factors having on the
market share of this product also giving some recommendation to AXA for increasing its
market share.
AXA Business insurance
AXA is one of the biggest companies offering financial insurance to the international market
with headquarter in France. However, AXA is the representation of the group of many
companies but it is organized independently in many different countries as per the country’s
laws and regulations.
The company works under five different business felids: Life and Savings, Property and
Casualty, International Insurance, Asset Management, and Banking. The Life and Savings
fragment offers items including individual and gathering investment funds items, life and
wellbeing items for both individual and business customers. The Property and Casualty
portion offer items including engine, family unit, property and general risk insurance for both
individual and business clients, principally little to medium estimated organizations. The
International Insurance section centres on risks, reinsurance, and help. The Asset
Management fragment incorporates broadened resource the board and related
administrations. The Banking portion includes in the financial exercises, which incorporates
retail banking, contracts credits and reserve funds led principally in France, Belgium, and
Germany.
AXA has built up itself as a key player in the riches the board/insurance area in creating
nations. Today, 52 million customers on the planet trust AXA and the AXA name. Since
1998, the AXA Group has been working together under a solitary brand with worldwide
reach.
AXA is the UK’s biggest start up business insurance provider.
AXA trades in the UK as AXA UK using several subsidies such as AXA sun life, AXA
investment manager, AXA PPP health care AXA Wealth. Company’s market capitalization is
around 64.1 B USD. The company is listed in a Forbes as 65th top regarded company 2018,
and 97th most valuable brand in 2013.
Cyber insurance
In today’s technology world, social media and internet play a key role in the many
transactions o the business and these key aspects serves many kinds of cybercrime and
attacks. Regardless of whether propelled by ordinary programmers, crooks, insiders or even
country states, cyber-attacks are probably going to happen and can make moderate extreme
misfortunes for associations expansive and little. As a part of risk
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management plan cyber insurance is an important product to purchase to secure the
organizations from several cyber-attacks.
Cyber insurance policies, additionally alluded to as cybersecurity insurance or digital
obligation insurance coverage (CLIC), is intended to enable an association to moderate
hazard introduction by counterbalancing costs required with recuperation after a digital
related security rupture or comparative occasion (AON, 2017).
European regulation introduced an act general data protection regulation act on 25 May
2018 (Groot, 2019). These standards basically protect a business from several cybercrimes
such as data security breaches and non-compliance management. AXA launches many
kinds of cyber insurance.
AXA XL Insurance's cybersecurity insurance approach accompanies extended coverage and
considerably more extensive terms to ensure against the present rising dangers. AXA offers
coverage for information insurance risks, both for the outsider cases and first-party
moderation costs following an innovation or digital occasion. Its products capacity is around
15 mn USD. The company cyber insurance includes coverage of several risks:
 Privacy and scrutiny liability
 Data Breach Response and managing crisis
 Privacy regulatory defence costs an coverage
 Data recovery
 Cyber extortion (XL, 2018).
In 2018 AXA also provide new service of cyber insurance policy specifically designed for
small and mid-sized businesses (SMBs).
the on-request, AI-powered digital insurance service grows the backup plan's scope in the
digital insurance market and gives SMBs access to wide digital insurance, also digital
security assets to enable them to ensure their income, gainfulness and client connections.
AXA XL's digital insurance service is designed for organizations under $20 million in yearly
income and offers limits from $250 thousand up to $3 million. Using Slice's E&S business
permit, the advanced stage gives extensive coverage that can without much of a stretch be
bought in only minutes for qualifying SMBs. This straightforward on boarding process
enables clients to effectively obtain an approach as well as submit the first notice of
misfortune through our cases bot (Insurance Journal, 2018).
The policy incorporates coverage for information security and risks Insurance, both for
outsider cases and first-party moderation costs. These are frequently connected with a
digital attack, such costs for notice, credit checking, information recovery, notoriety the
board, loss of business and additional cost. The coverage also gives insurance to digital
blackmail threats and other breach-related liabilities including administrative penalties,
GDPR and Merchant Services Agreements. The AXA XL cybersecurity insurance
arrangement is conveyed with canny information to help SMBs comprehend their digital risks
introduction and figure out how to reinforce their digital defences. Clients have furnished an
individualized dashboard with a general digital hazard evaluation and scores alongside
benchmark scores of their industry peers over each hazard category (XL, 2018).
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Demand Factors of Cyber insurance
In this digital world, digitalization becomes a key aspect for many businesses, without
internet and digitalization it’s impossible to run a business however these involve many
cyber risks and breaches. The impacts of cyber breaches on organizations, governments,
and charities effects millions of customer’s data and security breaches and different kinds of
breaches such as phishing, theft identity, hacking, and many others (EIOPA , 2018). In the
UK in the year 2015, there are 38 firms hit by cyber-attacks and 24 firms in 2016 and around
69 firms hit in 2017. According to National cybersecurity centre, there are around 109 million
incidents of cyber frauds and around 1100 cyber-attacks in last 12 months, and around 590
of these observed as substantial and 30 other which needs necessary action by
governments. Increased cybercrime creates worries for many organizations and
governments also (Thomas, 2018). These risks create many kinds of losses for
organizations whether they are large or small, and these risks created demand for cyber
insurance. Cyber insurance is playing and key role in helping all the organizations and build
resilience. Here are several factors which drive the demand for cyber insurance.
• High cybercrime rate
• GDPR Act
• Digital payments and connectivity
• IT security and risk management
High cyber-crime rate
In the UK Cybercrime reached 63% (Ashford, 2018). Precisely 1,769, 185,063 client records
were leaked in all over the world (Mason, 2019). In 2017 the insurance world substantial
threat of ransomware software in the form of Peaty, not Peta ad malware attacks that
messed the computer system over 150 countries and other operations of numerous
industries includes hospitals, universities and shipping companies, and governments.
Although no one can ever measure the exact losses associated with these incidents.
NotPetya attacks stances at around 10bn, and WannaCry at 4bn $ and some estimates
have the Petty attack costing around 10times that of WannaCry (Gittle, 2019).
This increased cybercrime creates worries for cybersecurity, as a result, these worries
creates plenty of opportunities for AXA and many other companies.
GDPR Act and regulatory environment
The increment of cyber-attacks lead crates the worries of governments. The General Data
Protection Regulation is a European law on data privacy and security for all the organization
to protect their customer’s personal data. This becomes effective on 25 May 2018. All the
organizations across the globe required to compliant with the law and must protect the data
of all the EU citizens (Groot, 2019). Cyber insurance decreases the risk exposure to cyber
threats such as coverage of third-party liability, financial losses.
Digital payments and connectivity
Cybersecurity is one of the big challenges faced by stakeholders of the digital payment
ecosystem. With more and more users preferring digital payments, the chances of getting
exposed to cybersecurity risks such as online fraud, information theft, and malware or virus
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attacks are also increasing. Lack of awareness and poor digital payment ecosystem are
some of the primary reasons that have led to an increase in these attacks (KPMG, 2017).
IT security and risk management
With these digital market create many facilities, however, it creates huge IT risks for every
organization. Increasing cyber-crime becomes a key concern for an organization’s risk and
planning management part and leads them to purchase cybersecurity insurance.
Analysing the demand factors and their impact on market share
There is widespread estimation in the market that the implementation of the GDPR act-
organizations which are in non-compliance with this Act may face a huge amount of fines, as
result, these factors will stimulate a considerable rise in the demand for this cyber insurance
of the company. The major view of the defendants is that the estimated rise in demand in
this area will be more common instead of unexpected. Reason for this is that it is yet
uncertain whether this Act fines would be insurable and the fact that this law is very
extensive, with many organizations Concentrate on compliance for now. Inclusive, although
it is assumed that the GDPR Act will ultimately raise awareness of cyber risk and drives
demand for cyber insurance.
Apart from the GDPR, increased cybercrime rate and digital payment concept keep the
organization awake at night. These major risks are the driver of the operational risk and that
organizations looking to the insurance industry to deliver wide coverage for the cyber risk
they face. Most organizations in recent years faced cybercrime which contains a huge
amount of direct and indirect cost to the company, by providing cyber insurance, the
insurance company provides defence cost to the victim company. Insurer Company provides
coverage to their losses, however, the defence cost coverage is lower than their direct cost
of losses from cybercrime and most companies ask for expanded coverage (OCED, 2017).
AXA insurance provides increasingly comprehensive coverage. From supports to extended
coverage language, bearers are revising arrangements to meet a lot more torment focuses
on their purchasers. A few supports have started to show up, covering things like framework
disappointments, social designing misfortunes, considerable reputational misfortune, and
equipment misfortune. In like manner, a few supports give purchasers the decision of
choosing which arrangement will deal with their case on account of a business intrusion
misfortune where there might cover coverage with their property approach as well as a
social designing misfortune in which their wrongdoing strategy may react (XL, 2018).
AXA’s products coverage:
Third party liability
 Data breach security and privacy liability
 Media internet communication
First Party losses
 Business interruption and extra expense
 Loss/destruction of electronic assets
 First party incident responses including IT forensics, notification costs, call centre,
and PR expenses
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 Privacy regulatory defence costs and coverage of regulatory fines and penalties
(where insurable by law) arising from a privacy or security wrongful act
 Data restoration
 Cyber extortion (XL, 2018).
These coverage policies influence buyers to buy this product and keep them safe from cyber
risk and increased demand lead to an increase in this product’s market share.
Conclusion
This report concluded that the market is continuing its digital transformation with no sign of
risks these digital facilities contains. On the other side hackers are becoming more
sophisticated at exploiting the networks and leak the confidential information to achieve their
goal and the amount of high profile case cyber-attacks are keeps increasing. These
breaches create more challenges for organizations to keep the latest security solutions. In
this context being the largest insurance provider across the world AXA having plenty of
opportunities. As the technology and digital environment develop, new risk will rise and
opportunity will appear as the demand for service and products develops.
Recommendations to increase market share
The potential for cyber insurance coverage to contribute to risk and loss reduction of the
company, management of this loss and market share can be increased id the market is able
to solve and reduce the most important risks and problems for the victim organizations. AXA
can possibly increase its market share and maximizing the contribution and coverage which
makes to deal with these quick evolving risks by analysing ways to deliver the fundamental
hindrances to market share improvement, especially over the accompanying policies:
Understanding impediments and gaps of the market: As misfortunes from digital
episodes increment, the advantages of and enthusiasm for having insurance coverage for
this hazard is expanding. Anyway, with the goal for coverage to turn out to be generally
accessible and receptive to request, there are a number of obstacles and holes in the market
(OCED, 2017). AXA ought to be urged to work further toward this path, and has to distribute
an arrangement report that could propose strategy suggestions that address the hindrances
to advertise improvement and the accessibility of digital insurance.
Improving the data available for quantifying exposures: Increasingly extensive
information on the recurrence and effect of cyber incidents (and the related cases payments)
would provide more trust in the endorsing of insurance coverage for cybercrime – AXA has
to provide greater clarity and quantify exposure that AXA is offering for cyber risks and crime
and furthermore, in which policies that coverage is being offered, involving: (I) a reasonable
proclamation about the coverage for cyber risk in customary policies; and (ii) blended
terminology for characterizing the coverage provided for various incidents types and losses
as well as noteworthy consistency as far as the triggers for that coverage, perceiving that
terminology may need to advance as the idea of cyber risk changes. AXA should mean to
keep extending the extent of coverage accommodated digital risk, involving for existing risk
not at present secured by insurance policies and for new kinds of losses that may develop
because of an advancing digital risks environment, while guaranteeing that the dangers
associated with any extended coverage provided are surely known and would not harm its
capacity to meet its commitments to policyholders. AXA needs to Reinsurance markets
(customary and elective) should keep on looking at policies to extend
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the extent of coverage that they make accessible to essential safety net providers for cyber
risks that are surely known also, The company should make unmanageable dimensions of
conglomeration risk (OCED, 2018).
Improving the coverage policies to manage cyber risk: There the large scope of the
coverage of the cost of cyber-attack for AXA. Here is the table showing coverage scope of
several incidents where the company can give a better opportunity to many organizations to
buy cyber insurance, which will lead AXA to increase its market share.
(OCED, 2017).
Apart from all, the basic recommendation to increase market share for cyber insurance is
that insurance agencies can extend cybersecurity insurance contributions as pursues.
Approaches must contain severe per-event deductibles and through requests on insureds'
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cybersecurity assurance. This will keep premiums moderate while urging insureds to
alleviate their dangers.
Points of confinement ought to be liberal on both per-events also, total bases, since bearers
are progressively capable to accept the danger of high-seriousness misfortunes than
insureds, and there is restricted open door for insureds to limit these low-recurrence
occasions. Coverage ought to be adaptable to address insureds' specific concerns.
While cyber risk is related with some staggering losses, a lack of information and lack of
accord in the technology world with respect to how to treat it, this is decisively why
statisticians' particular range of abilities and experience can include value. As I compose, the
biggest insurance organizations are growing their cyber liability teams, considering this
coverage's colossal potential. The individuals who can settle the riddles of digital coverage
and address their customers' issues will be remunerated. Opportunity thumps! (EIOPA ,
2018).
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Referencing must be completed before submission
All sources must be referenced in the body of your answer as well as in your reference list. See
the 530 Specimen coursework assignment and answer for examples of how to reference
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References
AON, 2017. Global Cybe Markey Overview. [Online]
Available at: https://www.aon.com/inpoint/bin/pdfs/white-papers/Cyber.pdf
Ashford, W., 2018. Cyber crime in UK. [Online]
Available at: https://www.computerweekly.com/news/252433873/Business-cyber-crime-up-
63-UK-stats-show
AXA, 2018. About us. [Online]
Available at: https://axainsurancecompany.com/
EIOPA , 2018. Understanding Cyber insurance. [Online]
Available at: https://eiopa.europa.eu/Publications/Reports/EIOPA%20Understanding
%20cyber%20insurance.pdf
Gittle, J. C. a. J., 2019. Cyber insurance market: The year in review. [Online]
Available at: https://axaxl.com/fast-fast-forward/articles/cyber-insurance-market_the-year-in-
review
Groot, J. D., 2019. What is the General DataProtection Regulation? Understanding &
Complying with GDPR Requirements in 2019. [Online]
Available at: https://digitalguardian.com/blog/what-gdpr-general-data-protection-regulation-
understanding-and-complying-gdpr-data-protection
Insurance Journal, 2018. AXA XL, Slice Labs Launch On-Demand Cyber Coverage for
Small, Mid-Size Businesses. Insurace journal.
KPMG, 2017. Digital paymentsAnalysing the. [Online]
Available at: https://assets.kpmg/content/dam/kpmg/ca/pdf/2017/04/digital-payments-
analysing-the-cyber-landscape-kpmg-canada.pdf
Les, D., Burrlow, J. L. & Kleindl, B., 2011. Principles of Business. s.l.:Cengage Learning.
Mason, J., 2019. 14 Most Alarming Cyber Security Statistics in 2019. [Online]
Available at: https://thebestvpn.com/cyber-security-statistics-2019/
OCED, 2017. Supporting an effective Cyber insurance market. [Online]
Available at: https://www.oecd.org/daf/fin/insurance/Supporting-an-effective-cyber-
insurance-market.pdf
OCED, 2018. Unleashing the Potential of Cyber insurance. [Online]
Available at: https://www.oecd.org/daf/fin/insurance/Unleashing-Potential-Cyber-Insurance-
Market-Summary.pdf
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Secretan, P., 2018. Aquaculture insurance. [Online]
Available at: http://www.fao.org/3/a1455e/a1455e02.pdf
Serpa, J. a. K. H., 2016. The strategic role of business insurance.. Management Science.,
pp. 384-404.
Thomas, B., 2018. The role of Cyber Insurance (and why it’s important). [Online]
Available at: https://www.proteanrisk.com/insights/2018/the-role-of-cyber-insurance/
XL, A., 2018. AXA- Cyber insurance. [Online]
Available at: https://axaxl.com/insurance/insurance-coverage/professional-insurance/cyber-
and-technology
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