For years there have been warnings of an impending cyberwar that could literally make the lights go out, cripple hospitals and destroy infrastructure.

The concern over resulting economic devastation is so great that many cyber insurance policies have excluded coverage for losses resulting from acts of war including cyberwarfare.

Tom Johansmeyer, the global head of index classes at Price Forbes Re, said the anxiety was unwarranted and damaging the insurance industry.

“Cyber insurance could be a much bigger class but fear of cyberwar is killing its development,” Mr Johansmeyer told the ILS Bermuda Convergence conference. “The big bang is just not coming.”

He explained that cyberwar does not work very well as an overt attack on another country.

“It is cheaper, faster and more effective to blow something up,” he said.

“The various cyberattacks over the last 30 years have proven that cyber damage is easily reversible. It can take a day, a week or a month to get systems back up and running after a cyberattack, but ultimately recovery from it is much faster compared to a physical bombing.”

Mr Johansmeyer said the projected large economic loss from a widespread cyberattack had not materialised.

“Adjusted for inflation computer viruses like Yaha, WannaCry and NotPetya equalled $42.4 billion in losses with only Yaha above the 27-year average,” he said.

In contrast he said damage from wildfires and other climate disasters had cost insurers far more.

He said that if another country launched cyberwar on the United States, the US would retaliate with fighter planes, not further cyberattacks.

However, he said cyberwar was a great way to carry out espionage or coercive diplomacy.

Mr Johansmeyer, who is writing his doctoral thesis on the topic, is concerned that hand wringing over the possibility of cyberwar is “scaring the hell out of capital” and fear was keeping the industry from developing.

“If you are always worried that there is something on the periphery that can tank the industry and you are a conservative investor with a long-term time horizon, you are going to look at this and hang back on cyber,” he said.

Some people have dubbed a recent wave of increasingly damaging cyber attacks — a ransomware crisis.

Mr Johansmeyer feels these attacks were a missed opportunity for insurers to grow aggressively.

“Over pricing hollowed the growth prospects,” he said.

He said that as a result of the ransomware attacks premiums went up due to price increases.

“We saw a lot of companies non-renewing, cutting their renewals, or clients leaving the market to go with captives,” he said.

He said the insurance industry had to incentivise capacity to enter and that meant a real view of the risk.

“We need to get the right people playing in the right positions,” Mr Johansmeyer said. “We need reinsurers to start taking volatility. Insurers increasingly want that. Prices need to come down.”