Insurers have been warned they are wading into unchartered waters as the cyber market continues to grow.

Industry think tank the Geneva Association says insurers have to manage exposures and threats with distinct characteristics.

“Exposure bases are hard to define and measure,” the association’s Senior Adviser Insurance Economics Daniel Hofmann said.

“Historical claims data are scarce and not good predictors. Threats are constantly evolving, can spread widely and rapidly, and a series of consecutive large events is plausible.

“Moreover, a high degree of interconnectivity may result in potentially boundless impacts.”

A large single event or series of events – one of four key accumulation risks facing insurers – may make cyber insurance unprofitable, the Geneva Association says.

The three other accumulation risks are underestimating exposures in unplanned shocks, insufficient quality data for modelling, and governments failing to provide frameworks for the sharing of cyber-terrorism losses.