The cyber-insurance market needs more capacity and could require coverage limits up to $US1 billion ($1.43 billion), according to a report from the US Federal Insurance Office (FIO).

“Concerns have been raised regarding the capacity and scope limitations of the cyber-risk insurance market, with some market participants describing market capacity for cyber risks as ‘very small’ and observing that billion-dollar coverage limits are needed to adequately address the losses posed by cyber risks,” it says.

The FIO estimates the US cyber market at $US2.75 billion ($3.92 billion), and warns insurers themselves are “data-rich targets for cyber attackers”.

“For this reason, insurers should be examined and held to the same nationally rigorous regulatory standards for cyber security as other financial institutions,” the report says.

The FIO will continue to monitor the market’s progress.

“Development of the cyber-insurance market is expected to continue as insurers gather information, improve underwriting processes for cyber risks, increase capabilities for pricing all forms of cyber-risk coverage and build relevant subject matter expertise.”

Also see ANALYSIS