Conning & Company Study Finds E-business Coverage Risks May Outweigh Rewards for Insurers.

Business/Technology Editors

HARTFORD, Conn.--(BUSINESS WIRE)--March 18, 2002

Businesses' increased use of the Internet is creating a substantial growth opportunity for the emerging e-business insurance market, but e-business insurance may not be a good market for every insurer, according to Conning & Company.

Only a handful of insurers have jumped into the e-business insurance marketplace. However, as many other insurers develop their e-business strategies, a new study from Conning & Company recommends taking a cautious approach. There are many questions about both the short-term and long-term viability of e-business insurance that are difficult to answer such as how rapidly the market will grow and how the industry can manage the global scale risk for Internet-related catastrophes.

Conning's study, "E-business Insurance Products- Emerging Market or Specialty Coverage?" reports that insurers need to consider many factors before entering this marketplace with an estimated 100% annual premium growth rate. However, there may be substantial rewards for successful insurers. If the e-business market expands rapidly, Conning projects that premiums can mushroom to $6 billion by 2006.

"It's easy to see the rise in e-business loss exposures; it is more difficult to predict how these exposures will translate into insurance coverages and premium dollars," said Clint Harris, Vice President and author of the study. "E-business is redefining the what, when, where, how and how much of business loss exposures. When things go wrong on the Internet, they do so at lightning speed. Devastating losses can hit businesses anywhere in the world."

Hackers and viruses threaten any business connected to the Internet, even those just receiving email. Indications are that threats will continue to escalate as virus creators are able to exploit increasingly sophisticated malicious code and as businesses become more dependent on the Internet for their internal operations as well as customer service and sales.

The e-business insurance market has not yet evolved as rapidly as the associated risks. Despite the growth in e-business loss exposures there are few insurers offering standalone insurance coverage for both first- and third-party e-business exposures. As a prerequisite for market entry, insurers must understand, anticipate and quantify individual risk and accumulation loss exposures that are still rapidly evolving. Changes in technology, statutes and case law precedents add extra complexity to the development of coverage, loss control, pricing and distribution strategies. Insurers face a multitude of considerations in order to determine "if," "when" and "how" to enter the e-business insurance marketplace.

Conning's new study provides an environmental scan of the current e-business marketplace and introduces three market growth models- Rapid Expansion, Assimilation and Divided Markets. The also study identifies and analyzes market entry and exit considerations that are unique to e-business insurance.

"E-business Insurance Products- Emerging Market or Specialty Coverage?" is available from Conning & Company for $900 by calling toll free [phone] or [phone]. A complete listing of all Conning Strategic Studies can also be found by visiting the company's web site at www.conning.com.

About Conning

Conning is one of the largest asset managers specializing in insurance company investments in the United States, a leading source of private equity capital to financial services companies and a nationally respected provider of research publications on the insurance industry. Conning is located at CityPlace II, 185 Asylum Street, Hartford, CT 06103.