Over the last several years, cyber attacks have grown both in scale and complexity with global ransomware incidents alone increasing by a record 105% in 2021. As more businesses move online and cyber attackers become more sophisticated, we anticipate that the incident rate will continue to increase dramatically over the next five years, representing a major concern for governments, private organizations, and civilians alike.
To counter this threat, the cyber insurance market is expected to evolve with providers introducing new and innovative products to keep pace with consumer’s needs.
Read on to learn more about the future of cyber insurance, then reach out to us at GetCyber for more information.
The Future of Cyber Insurance
Cyber insurance will be evolving to match the increased threat of cyber attacks.
Insurance products will evolve
Cyber insurance is traditionally included only in “bundled” packages alongside CGL and E&O policies. However, insurers have now started offering cyber as a standalone policy with a more robust set of customization options and higher limits.
Risk management is critical
In addition to changes in product offerings, insurers will increasingly require customer’s to adopt robust risk management procedures. We expect insurance companies to ask policyholders to prove their risk mitigation and management tactics as a part of both registration and policy renewal. A business that has suffered a data breach or cyber attack will need to provide a risk mitigation plan to maintain coverage and will also likely shoulder a greater burden to prove that cyber controls were in place and being followed prior to the reported breaches.
Agents and brokers such as Apollo work with their policyholders to develop a cyber risk management plan so these businesses can stay ahead of the curve. A cyber risk management plan can include the following steps:
- Audit and determine digital assets critical to the organization, then decide which assets are most likely to be attractive to hackers and assess their security level.
- Outline the risks and threats to the organization usings past breaches or claims to help identify weaknesses and threats.
- Determine how to respond to cyberattacks including outlining action items, training employees, and creating a culture of security-preparedness.
- Structure ongoing reviews of policies and controls with a focus on procedure changes, necessary policy modifications, and error checking
Demand for cyber insurance will rapidly increase
As technology continues to evolve, businesses start to rely more on technology to pay invoices, communicate with customers, store and access data, pass information to vendors, and more. These digital touchpoints are all a potential source of weakness that hackers can exploit.
Brokers are reporting that more than half of their existing customers are now buying close to half cyber solutions compared to only a quarter just five years ago. We expect the trend to continue and demand for cyber insurance to significantly increase.
Coverage limits may change
Insurance companies may start capping or limiting coverage or reducing limits for ransomware attacks or other data breaches. Clients in some industries may start to see less capacity in the market.
This is happening in part because cybercriminals have started attacking businesses with cyber insurance coverage — matching their ransom demand to the amount of coverage available under the policy.
Given that insurance companies are responsible for these payments, they may begin limiting or changing the conditions or policy limits in response. For example, the French insurance group AXA recently stopped including ransom coverage on its cyber insurance policy in France.
The Bottom Line
The future of cyber insurance is dynamic and cyber products and services will continue evolving as the risks change. Criminals and hackers are constantly searching for new ways to exploit data and gain access to systems, and cyber insurance products can help protect businesses and promote sound cyber risk management strategies at the same time. The future of cyber insurance will bring new products, services, and innovations to our industry to meet the needs of a digitalized world. Reach out to the experts at Apollo Brokers to learn more about cyber insurance and how cyber coverage can help protect your business. We’d be happy to help you structure a program to best meet your complex needs.