As cyberattacks become more common, insurance rates for cyber liability policies are increasing at a record pace.
The past year has seen a rapidly hardening cyber insurance market as cyberattacks have surged in both cost and frequency.
This increase in attacks has, in turn, resulted in a rise in cyber insurance claims and subsequent underwriting losses.
Amid these market conditions, most policyholders experienced higher cyber insurance rates at their 2022 renewals, with many insureds seeing double-digit rate increases.
In fact, industry data shows that rates rose by as much as 50%- 100% during the first quarter of the year, depending on policyholders’ specific exposures, loss history, and risk management measures. Insureds have also begun encountering coverage restrictions, and further scrutiny from underwriters.
In this video, we break down exactly what you need to know about rising cyber insurance rates...
Why Cyber Insurance Rates Are Rising at Record Rates
As the world has become increasingly digitized, so too have the risks that businesses face.
One of the most significant dangers businesses now face is cyberattacks, which can result in massive financial losses. As a result of this increased risk, cyber insurance rates have been rising at a record pace.
In the past year alone, there have been a number of major cyberattacks that have cost businesses billions of dollars. As attacks become more frequent and costly, insurers are starting to lose money on their cyber insurance policies. In order to offset these losses, insurers are raising rates for all policyholders.
For many businesses, their 2022 renewal premium represented a significant increase from the previous year. In some cases, premiums increased by as much as 50-100 percent.
Here are the trends and marketplace factors impacting the cost of cyber insurance.
READ NEXT: Why Every Small Business Needs Cyber Liability Insurance
Increased nation-state threats and coverage exclusions
Cyberattacks have become a growing concern over the past year, especially as the ongoing Russia-Ukraine conflict contributes to global cyberwarfare worries.
In March 2022, the White House issued a statement warning U.S. organizations that nation-state cybersecurity exposures stemming from Russian attackers would likely increase in the coming months. The federal government also introduced new initiatives to harden the nation’s cyber defenses against for- foreign threats and urged businesses to follow suit.
Apart from elevating their cyber defenses, some insureds have sought coverage for emerging cyber warfare risks.
But, these policy-holders have likely faced challenges obtaining such coverage, primarily due to war exclusions, which generally state that damages from “hostile or war-like operations” are not covered.
Despite these challenges, insurers have begun to provide coverage for cyberwarfare risks in some instances, typically through endorsements that remove or modify war exclusions.
As cyberattacks continue to escalate, it’s likely that more insureds will seek coverage for these risks and that insurers will continue to evolve their policies to better address these threats.
Elevated ransomware concerns
Ransomware attacks have been on the rise in recent years, affecting many businesses, especially small- and medium-sized establishments.
Yet, according to industry data, ransomware activity decreased by 20% in the first quarter of 2022 compared to the fourth quarter of 2021.
This is likely due to international law enforcement operations disrupting several high-profile ransomware groups since the beginning of the year. However, this does not mean that businesses can let their guard down.
Cybercriminals are always changing their tactics, and ransomware attacks are still a major threat. That's why it's important for businesses to work with trusted insurance professionals to secure cyber coverage that meets their unique needs.
Insurance can help protect businesses from financial losses caused by ransomware attacks and other cyber threats.
So, if you're thinking about buying cyber insurance, be sure to start the process early and be prepared to complete supplemental applications regarding your cybersecurity practices. And take advantage of loss control services offered by insurance carriers to strengthen your cybersecurity measures.
By taking these steps, you can help protect your business from ransomware attacks and other cyber threats.
READ NEXT: How To Make Sure Ransomware Is Covered On Your Cyber Liability Policy
Heightened business email compromise (Phishing) risks
Phishing scams are becoming more and more common, and they're also becoming more and more expensive.
Business email compromise scams entail a cybercriminal impersonating a legitimate source within an organization to trick their victim into wiring money, sharing sensitive data, or engaging in other compromising activities.
These scams are among the most expensive types of social engineering losses, and they have emerged as a major threat.
According to the FBI, BEC scams caused more than $43 billion in losses since 2016, with such losses increasing by 65% between 2019 and 2021 alone.
Phishing scams are becoming more sophisticated, so it's important to be aware of the dangers they pose.
If you think you may have been a victim of a phishing scam, contact your local FBI office immediately.
The Rub
Cyber insurance is rapidly becoming one of the most important business insurance coverages for every business, regardless of size, industry, or marketplace.
For most businesses, cyber insurance is greater risk exposure than general liability insurance (the most common business insurance coverage).
To protect the longevity and sustainability of your business you need the right cyber liability insurance policy which includes ransomware as a backstop in the event an attack happens.
At Rogue Risk, we specialize in cyber insurance, work with over 10 of the top cyber liability insurance carriers in the world, and can turn a quote around in minutes.
If your current insurance professional has never addressed cyber liability insurance with you before, then I’d encourage you to reach out to us today.
- You can call or text us at 518.960.6600
- Click here to contact us via email.
I look forward to introducing you to a new way of viewing your insurance program.
Thank you,
Ryan Hanley
