MARSH Singapore, the largest insurance broker by market share here, expects demand for cyber liability insurance to grow as companies become more concerned over reputational damage from a cyber attack.
A survey it conducted showed that significantly more companies (65 per cent) this year said reputational damage was their top concern following a cyber attack or data breach, compared to last year (44 per cent).
In spite of this, the take-up of cyber liability insurance has been gradual, said Iris Teo, CEO of Marsh Singapore, in an interview with The Business Times.
She noted that there appears to be some inertia, with just 47 per cent of companies planning to buy or renew cyber liability insurance in the next 12 months - down from 62 per cent a year ago.
But, she added: "Insurance for new and emerging risk areas, such as cyber risk, always requires a longer gestation period. Take-up rates tend to begin slowly, and then accelerate as companies, and the industry, develop a deeper understanding of the area."
This was the case in the United States and the United Kingdom, where cyber liability insurance is becoming a common class of business insurance, Ms Teo added. Insurance can cover the whole gamut of risks, from negligence claims, to a loss of revenue from business interruption.
A massive data breach at US retailer Target in December highlighted the damage that can ensue from such an incident. After credit-card details of over 100 million people were stolen, Target said sales were significantly weaker after the breach, as consumers shied away for fear of a repeat incident.
A similar data breach also took place in South Korea.
As for Singapore, Ms Teo said, the gradual take-up of cyber liability insurance could suggest a surge in demand later, as data protection issues here bear greater prominence in the coming months.
This awareness, combined with the full Personal Data Protection Act, or PDPA, coming into effect in July, should prompt companies to examine their risk management and insurance programmes more closely.
"It's encouraging to see the 'it won't happen to me' mindset changing, as companies recognise the new reality of cyber risk in Singapore and across Asia," said Ms Teo.
Greater awareness has also lifted demand for liabilities insurance for directors, she pointed out. As directors become more concerned about the risks of poor corporate governance, they have been more vigilant in checking that companies have them covered.
"Before, if they were invited to the board, they would just feel very honoured," said Ms Teo.
"Now, they ask: 'How much is your director's liability policy?'"
She noted that the more developed a market is, the more litigious it tends to be.
Ms Teo also pointed out other changes in company policies here as Singapore society evolves. Marsh Singapore, which sells insurance directly to companies as well as offers consultation services, has seen companies providing a more flexible suite of benefits.
Businesses here are now looking into healthcare coverage for their employees, particularly as they juggle the costs from higher employee benefits against the need to attract talent.
This means that, instead of providing healthcare coverage alone, companies can provide gym subscriptions or even subsidies for eye care, noted Ms Teo.
"We are encouraging clients to look at wellness programmes," she added.