New York’s Department of Financial Services says insurers have a key role to play in helping to prevent an “armageddon-type” cyber event.

Financial Services Superintendent Benjamin Lawsky says it is impossible to take cyber terrorism too seriously, and the increased sophistication of hackers raises concerns of a systemic, co-ordinated attack.

“I worry we are going to have some sort of major cyber event in the financial system that is going to cause us all to shudder,” he said at the recent Bloomberg Markets Most Influential Summit.

“It is, to me, the most significant issue I think the [department] will work on in the next year. It is probably one… of the problems that keeps me up at night as a financial regulator.”

Mr Lawsky says there is currently only a small cyber-insurance market, but it could be developed further.

“If we can come up with ways to incentivise or push the companies we regulate to offer more of this, it could create a situation where you will be able to, as a firm, get insurance for a cyber attack, but you are going to have to raise your standards in terms of the protections that you have in place.”