Cyber insurance is currently the most dynamic line of business and is predicted to grow from currently USD 2.4bn annual premiums to USD 20bn by the year 2020. New players are entering the market and are attempting to cater for the SME market, the large corporate market and to provide specific offerings by industry. In a recent article published by Insurance Day, Steve Worrell of HSB states that insurers cannot just apply a scaled down version of their corporate solution to the SME market and need to take the “bottom up approach” instead. Already today however, the product offerings – depending on the provider – will spread across multiple “classic” lines of business including elements of first and third party insurance as well as crisis management and other risk management elements and is still evolving.
In trying to achieve compliance in respect of taxes, there are challenges that need to be faced now and going forward as the respective parts of the insurance premiums will be subject to multiple types of IPT and associated taxes and some of it may even be VAT taxable depending on the exact policy wording. With the anticipated increase in annual premiums this may change, but currently there is no specific “cyber class of insurance” defined by regulators or tax regimes and it is hence up to the insurers to make sure all taxes are applied and paid in accordance with the law and regulatory requirements.
Ilka McHugh MSc FCII Client Director
+44 (0)7880 197311