Cyber risk insurance is nearing $US1 billion ($978 million) in annual premiums globally, as companies look to cover losses from social media attacks, privacy breaches and data damage.

Aon Risk Solutions Global Practice Leader for Cyber Insurance Kevin Kalinich says as the market grows insurers are increasingly denying coverage under general liability and property policies and are willing to go to court if clients threaten to sue.

He says brokers and insurers have to consider their own risk of client legal action – for example, if a client accuses their broker of negligence for not suggesting a cyber liability policy.

Some $US800 million ($782 million) was paid in annual premiums for cyber risk policies last year, up from $US200 million ($195.6 million) prior to 2008.

Insurers are excluding intangible asset perils such as trojans, worms and other cyber risks from general liability policies at the same time that class actions against companies for privacy breaches are becoming more lucrative, Mr Kalinich says.

He told Aon’s Advanced Risk Finance Conference that new technology and increasing reliance on data have created new exposures, exemplified by the recent social media attack on Sydney broadcaster Alan Jones, in which advertisers on his radio station had their electronic networks disrupted.

Mr Kalinich says corporate clients’ stakeholders, such as regulators and customers, are increasingly forcing them to show how they manage cyber risk and that they have insurance.

But he notes companies’ views of their exposures vary widely.

Some buy policies just to satisfy contract requirements. A manufacturer’s main concern might be damage to its logistics network, while other companies are worried about financial losses from customer privacy breaches.

Mr Kalinich says the Sony data breach, when details of 77 million PlayStation customers’ identities were stolen last year, is estimated to have cost more than $US280 million ($274 million) and has prompted 55 class actions.

There is limited data to help price cyber risk because the peril is relatively new, but Mr Kalinich says underwriters are looking at companies’ response strategies as well as prevention.