The cyber risk insurance market is growing steadily, with financial institutions such as health funds and smaller banks among the first adopters, according to Zurich Head of Financial Institutions Asia-Pacific Damian Lynch.

“They are the ones who are most interested,” he said at a financial institutions forum hosted by Zurich in Sydney last week.

“They say they not only have all your financial information, but they also have all your medical information. So they have a whole lot of confidential information, which if stolen can lead to all sorts of consequences.”

Cyber risk cover entered the market about 13 years ago but is only now taking off, Mr Lynch says.

In 2011 Zurich released its security and privacy protection product – covering first-party liability and third-party loss – and its commercial crime policy for business. Both cover against the increasing risks of cyber crime.

“We’re getting some traction with this now at Zurich,” Mr Lynch said. “It’s the thing most people want to discuss. I get asked to talk about cyber cover more than anything.

“So I think there’s potential there. I think the way it’s taking off here gives me cause for optimism that this is a market. It’s cutting-edge at the moment.”

Fraud risk is of particular concern in some countries, according to Singapore-based Mr Lynch.

“I am responsible for a book of business that includes all of Asia, where… fraud is the main thing I worry about for financial institutions. Some countries are just inherently safer and some are not. We have had some pretty serious fraud losses paid in Asia, that’s for sure.”

Ernst & Young partner and fraud specialist Rob Locke says record levels of fraud were reported globally last year, and economic pressures such as higher unemployment and flattening business management structures will continue the trend.

“It’s a sad indictment on society but fraud is the fastest-growing service line for Ernst & Young in the Asia-Pacific region,” he told the forum. “Fraud now generates 40% of our financial services revenue. I don’t mean to sound like the grim reaper, but business is brisk.”