On 14 December, the Swiss Insurance Association (SIA) presented a new risk model for cyber risks. It was developed for the first time in Switzerland in collaboration with Moody's RMS, a leading provider of risk modelling and analysis. The model calculates the magnitude and probability of large losses from cyber events.
"With the risk model, we have been able to take an important step towards further improving the quantifiability - and thus, above all, the insurability - of cyber risks in Switzerland," says Urs Arbter, Director of the SIA, commenting on the collaboration with the risk modelling specialist.
For example, according to the model presented, there is a one percent chance of a cyber event occurring each year, which would result in a total economic loss of over CHF 2.5 billion. Such an event can therefore be expected to occur on average once every hundred years. According to this estimate, however, only losses of just under CHF 155 million would actually be insured under current conditions. The risk model presented thus points to an insurance gap estimated at more than 90% in Switzerland.
An insurance market with huge potential
Given the relatively low penetration of cyber policies to date, this coverage gap is not surprising. Only just over 7% of companies in Switzerland are currently insured against cyber attacks. Thanks to a recent survey by the SIA, this too can be reliably estimated for the first time: The industry association of private insurers has calculated a premium volume of around CHF 108 million for 2022, divided between 46,000 corporate clients and around 292,000 private clients.
The market for cyber insurance products is also growing rapidly in Switzerland. On average, premium volume is expected to double every two years. "There is still huge potential for cyber insurance in Switzerland," says Arbter of the local market. According to Martin Jara, CEO of Helvetia Switzerland and SIA board member, it is now up to the industry to close the existing insurance gaps. "The focus is on three measures: the implementation of specific preventive measures by the companies to be insured, systematic data collection in cooperation with the relevant government and scientific institutions, and an increase in the current market coverage.