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SECURITY > Cybersecurity

Domestic cybersecurity insurance market to quadruple by 2020

  • November 8, 2017
  • , Nikkei evening edition , p. 1
  • JMH Translation

Major non-life insurers are expanding coverage of their cyber insurance products in response to the recent surge in global cyberattacks. Products cover a wide range of services: recompense for reputational damage and provision of security diagnosis as well as data breach protection and system restoration. Cyberattacks targeting Japan are expected to rise with the approach of the upcoming 2020 Tokyo Olympic Games. As such, related insurance products are forecast to quadruple, and insurance companies are preparing to attract demand.

 

Mitsui Sumitomo Insurance Company and Aioi Nissay Dowa Insurance are jointly developing a new product to protect against cyberattacks. It will be launched in January 2018. It covers a wide spectrum of damages, from online reputational damage to corporate brands when personal information may have been compromised, to perished food products from damaged refrigeration facilities.  

 

The insurance policies are designed for the retail, IT, and manufacturing sectors that handle vast amounts of client information. The two insurance giants hope to double their cyber insurance-related sales to 7 billion yen by 2020.

 

Sompo Japan Nipponkoa Insurance is venturing into foreign markets through Endurance American Insurance Company, currently called Sompo International, which it acquired in March of 2017.  Leveraging its U.S. subsidiary’s experience in cyber insurance offerings in mainly the American market, Sompo has been granted approval to sell insurance policies in some 30 overseas markets in Europe and Asia. It aims to earn 10 billion yen by 2020 by catering to global corporate demand through centralized management of global risk.

 

From October, Tokio Marine & Nichido Fire Insurance has partnered with an American IT company and has started providing cyber risk diagnostic services to private companies by assessing technological vulnerabilities in a company’s network and internal systems, as well as evaluating personnel risk factors including employee satisfaction ratings. It plans to reinforce its response measures through partnerships with security-related firms such as NEC and LAC.

 

Recently, the threat from cybercriminals is intensifying through targeted emails directed at specific organizations and ransomware that blocks access to infected computers unless ransom is paid. According to the National Institute of Information and Communications Technology, there were 128.1 billion cases of cyberattacks in Japan in 2016, up around 10-fold compared with three years ago.

 

The amount of damage companies have had to shoulder has also been increasing for cases such as personal information breaches. In 2015, hackers accessed the personal information of 1.25 million of Japan Pension Service’s customers, forcing the government organization to make an outlay of some one billion yen to cover such things as the establishment of customer information liaisons and hotlines. There have also been a string of manufacturing companies that suffered tens of billions of yen in damages after systems were paralyzed due to virus infections.

 

The cyber insurance market is steadily expanding due to the recent change in environment. The OECD predicts that the 3.5 billion dollar global market (around 396 billion yen) as of 2016 will double by 2020. Sompo Japan Insurance estimates that the domestic market will quadruple to approx. 60 billion yen during the same term. Japanese insurance companies are focusing on emerging new fields for growth as their current source of revenue, including auto insurance, will only shrink with the declining population.

 

 

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