Insurers Eyeing Cyber Coverage

Insurers are eagerly monitoring exponential growth in the tiny cyber coverage market but their lack of experience and skills handling hackers and data breaches may keep their ambitions in check.

High profile cases of hackers seizing sensitive customer data from companies, such as U.S. retailer Target Corp or e-commerce company eBay Inc, have executives checking their insurance policies.

Increasingly, corporate risk managers are seeing insurance against cyber crime as necessary budget spending rather than just nice to have.

The insurance broking arm of Marsh & McLennan Companies estimates the U.S cyber insurance market was worth $1 billion last year in gross written premiums and could reach as much as $2 billion this year. The European market is currently a fraction of that, at around $150 million, but is growing by 50 to 100 percent annually, according to Marsh.

Those numbers represent a sliver of the overall insurance market, which is growing at a far more sluggish rate. Premiums are set to grow only 2.8 percent this year in inflation-adjusted terms, according to Munich Re, the world’s biggest reinsurer.

The European cyber coverage market could get a big boost from draft EU data protection rules in the works that would force companies to disclose breaches of customer data to them.

“Companies have become aware that the risk of being hacked is unavoidable,” said Andreas Schlayer, responsible for cyber risk insurance at Munich Re. “People are now more aware that hackers can attack and do great damage to central infrastructure, for example in the energy sector.”

Insurers, which have more experience handling risks like hurricanes and fires, are now rushing to gain expertise in cyber technology.

“It is a difficult risk to price by traditional insurance methods as there currently is not statistically significant actuarial data available,” said Robert Parisi, head of cyber products at insurance brokers Marsh.

Andrew Braunbergon, research director at U.S. cybersecurity advisory company NSS Labs, said that some energy companies have trouble persuading insurers to provide them with cyber coverage as the industry is vulnerable to hacking attacks that could trigger disasters like an explosion in a worst-case scenario.

Pricing on policies for retailers has climbed in the wake of recent high-profile breaches at Target, Neiman Marcus, and other merchants, he added.

Source

Will SSDs Make HD’s Obsolete?

HD makers can expect to see revenues decline as demand for traditional disk drives falls, according to IHS Isuppli.

Hard drive manufacturers Seagate, Western Digital and Toshiba have carved up most of the market, lowering warranties and keeping prices high after the Thai floods in 2011 that shuttered several factories. Now IHS Isuppli claims that the good times have come to an end, with industry revenues expected to drop by 11.8 percent in 2013 and 2014 not expected to show signs of improvement.

While Seagate and Western Digital gouged consumers by keeping prices artificially high even after production recovered to pre-flood levels, solid-state disk (SSD) drive makers aggressively brought prices down. Intel has also been pushing SSDs as part of its ultrabook specification and with Windows 8 tablets using SSDs, the long term prospects for hard drive makers are not looking good.

Fang Zhang, analyst for storage systems at IHS Isuppli said, “The HDD industry will face myriad challenges in 2013. Shipments for desktop PCs will slip this year, while notebook sales are under pressure as consumers continue to favour smartphones and tablets. The declining price of SSDs also will allow them to take away some share from conventional HDDs. However, HDDs will continue to be the dominant form of storage this year, especially as demand for ultrabooks picks up and hard drives remain essential in business computing.”

IHS Isuppli said Western Digital could overtake Seagate to become the market share leader by the end of 2013, and said that hard drives will see greater use in the enterprise market in cloud and big data use cases.

Source…