cybersecurity insurance trends cybersecurity insurance trends

The objective of this series is to provide clients with the highest quality insights and expertise on the changing and evolving cyber insurance marketplace. It reveals what's driving the increase in premiums and how the market will evolve in response to growing threats such as ransomware. Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. Until companies make cyber wellness and cyber hygiene a top priority in the boardroom and a key component of their brand, year-on-year premiums will continue to explode. As we look ahead, these are the top five trends we anticipate seeing in 2022. January 28th is Data Privacy Day, a reminder that organizations should review their privacy obligations. The latest trends in ransomware prevention and protection are Zero Trust Policies, Dark Web Monitoring, and Employee Cybersecurity Training with Phishing Simulations. Exacting cybersecurity standards must be defined and complied with by insurers and exposed industry sectors alike. Cloud Security: Cloud security involves shared responsibility between the provider and the customer. Sign up today for ACA news, alerts, and events. By clicking Accept All, you consent to the use of ALL the cookies. The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. But opting out of some of these cookies may affect your browsing experience. AXA's cyber insurance covers North America and writes policies for data breach response and crisis management, privacy and security liability, business interruption, data recovery, cyber. Munich Re experts assume that three factors in particular will characterise the threat landscape in 2022: ransomware, supply chain and critical infrastructures. Some criminal perpetrators also cooperate with state actors. The range of cyber products still needs to be made better publicised and the additional benefits of those products (i.e. 2023 Q1 State of the Cyber Market. Thecyber insurance market is still evolving, but according to Robinson, whats clear is that insurance providers can no longer be an organizations only risk management strategy. Join 300,000 other insurance professionals today. Some include a distributed workforce and new ransomware threats. Munich Re expects the global cyber insurance market to reach a value of approximately USD $20bn by the year 2025. Phishing And Social Engineering: These attacks manipulate individuals through deceit. At the same time, cyber-insurance policy providers are indicating that current approaches won't be sustainable forever. To secure against evolving cyber threats, businesses in 2023 must adopt advanced security technologies, continually test and update controls and educate employees on cyber risks. Cybersecurity Skills Shortage: The evolving threat landscape is leading to a shortage of cybersecurity professionals, with an estimated gap of 3.5 million globally. It is virtually impossible to quantify the risk. The economics of cyber insurance Laying the baseline for emerging trends in the cyber insurance market, Schein said the cost of insured cyber attacks grew by 22% in 2020 and 77% in 2021, but rates for cyber insurance grew much faster. But such measures could have immense bearing on public entities, which are amongthe least prepared for cyberattacks. In other words, companies that aren't proactive about cyber risk management will not be considered insurable going forward. Business decision-makers cited cyber threats as their No. Organizations must stay informed and compliant with evolving regulations to secure their systems against cyber threats. Its a positive sign shining light into a tumultuous market, which in 2023 will continue to face capacity challenges driven by increased demand, two-plus years of significant premium increases, more judicious limits deployment, and the exit of some players from the market. Receiving less media attention was an attack in the US state of Florida in which a hacker attempted to tamper with the supply of chemicals at a water treatment plant and thus poison water supplies. RPS data found that fraudulent payments and social engineering fraud among small to medium-sized enterprises made up more than 50% of claims between January and August 2022. They can ask the right questions, carry out assessments or penetration testing, as well as guide businesses to reach the required level of cyber resilience faster. While brokers and their clients should acknowledge that a lot of hard work has been done, cyber security is an evolving process. The Cyber Insurance market was. High-profile examples like the Operation Aurora attack on Google Gmail highlight the need for organizations to implement network segmentation and intrusion detection systems and collaborate with law enforcement to mitigate the risk of cyber espionage. How Technology-First Insurers Solves Data Problems? On the one hand, UK businesses face a plethora of pressures from rising cyber insurance premiums - an increase of 66% year-on-year by 2022 Q3 - and shrinking coverage (see about Global Cyber Market ). The cyber-insurance sphere must keep up with ransomware developments. Is Your Organizations Privacy Program Equipped to Tackle the Road Ahead? Cyberattacks are increasing every year as bad actors find easy targets in companies of all sizes, particularly small to medium-sized businesses. RPS data found that fraudulent payments and social engineering fraud among small to medium-sized enterprises made up more than 50% of claims between January and August 2022. 5. 2023 trends for the cyber insurance market RPS pointed to several themes in the cyber insurance market for the new year: "Inside-out" underwriting Sophisticated underwriters are using. In current data compliance dominated economies, the legal complexities . Attackers often plan their attacks for the long term and maximise the impact by targeting supply chains and industrial or automated processes. SC Media, cybersecurity experts, recently reported that cyber insurance premiums were up 5% in 2019; which, in the insurance world, are minimal increases. Premium trends Primary. In general, the cyber market as a whole is expected to continue its growth into 2020. Cyber Insurance Trends 2022. Munich Re continues to offer capacity, and our goal as market leader is clear: to jointly develop innovative, datacentric cyber solutions with our clients and partners. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Ransomware losses have dropped in the past few months, but they have increased in severity. Member of the Munich Re Board of Management. In Section 4.1.1, OCE describes the core challenges with the current state of the cyber Following one such attack on Colonial Pipeline, fuel shortages and panic buying temporarily paralysed regional infrastructure on the US East Coast and made headlines worldwide. In 2021, it was estimated approximately US$ 6tn. 20. For starters, industry professionals advise firms who already have cyber insurance or those considering obtaining coverage for the first time to begin the process sooner rather than later. In particular, the looming costs of a potential breach are applying additional pressure on firms to protect themselves from the possibility of staggering losses. Low limits and payouts, along with the 2018 underwriting trends, indicate that while cyber insurance customers are buying more cyber insurance with higher limits than in the previous 2 years, they are not getting what they want. targeted attacks on particularly lucrative extortion targets like pipelines, is not the only risk and that attacks on smaller and medium-sized government service providers or companies are also possible. Cybersecurity must be integrated into software, system design, coding and implementation. The dynamic of the above-mentioned transitions as well as the rising frequency and severity of cyber incidents will become manifest in an increasing demand for cyber insurance. Social engineering attackshave outpaced ransomware ones this year, fuelled by the global shift to hybrid working. While coverage limits fall and premiums soar, insurers are also expecting their clients to carry more risk through application of retention clauses. Digital attacks on energy providers, food providers, hospitals, administrative bodies and other areas of critical infrastructure reached a new peak last year. Our experts continually refine our internal models on the basis of our own and third-party data, and with a particular focus on accumulation risks. Flock raises $38 millon for insurance that enables quantifiably safer motor fleets, CyberSmart Raises 13M to Expand Cybersecurity Solutions, Altai Ventures launches $53mn fund to invest in insurtechs. Fraud and cybersecurity have largely been understood (and run) as independent of one another, yet both disciplines are a part of the broader security world. The early approach whereby attackers specialised decryption and later on exfiltration of stolen data is evolving to include multiple extortion schemes. Cyber product offerings reached significantly more decision-makers in 2022 than in the previous year (42% received an offer, compared with 34% in 2021). Cybersecurity insurance claims are increasing. Cybersecurity Ventures estimates global spending on cybersecurity in 2021 to have be US$ 262.4bn in 2021. Ransomware is becoming more common - and expensive. In 2021, cyberattacks on all sizes of companies were up 15%, according to a report by. How IoT Technology is Reshaping Insurance Business? If cyberattacks continue to rise, then the cyber insurance market will continue to evolve and change in order to meet the needs of policyholders. Employee awareness and reporting of anomalies to IT administrators can greatly reduce the risk of a successful attack. Companies are more aware of their cyber risk and are looking at the insurance market to mitigate that risk. Advanced authentication and enhanced subscriber protection measures are necessary for secure 5G experiences. You may be trying to access this site from a secured browser on the server. They will make endorsements around the vulnerabilities scanned, and if not addressed, these could impact an organizations coverage. Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. Prompt injection attacks on AI chatbots can reveal sensitive information about their inner workings and pose a significant threat to the security of the system. Since cyber-attacks are inevitable, it has become necessary to get yourself covered under a cyber insurance policy. The cyber insurance market has transitioned over the last few years: Capacity has tightened, rates continue to rise, and underwriters are looking much more closely at what risks they will write. Alex Smith, Intermedia Cloud Communications. Cyber insurance is no longer deemed a nice-to-have accessory for businesses. As the three previous trends discussed how certain aspects of the cybersecurity industry will continue to grow in 2023, expect the same from the cyber insurance market. By engaging early in the planning and application process, firms will be able to better identify existing gaps in their security and work to remedy them to increase their chances of securing a policy with more attractive rates and coverage. This is the nature of their relationship but it is not an exclusive one, since they usually dont work alone. Systemic risks and accumulation scenarios require a clearly defined risk appetite, in order for innovative and sustainable protection to be offered to insureds. In this market environment, we will be seeing more and more new players and participants covering risk: InsurTechs, managing general agents (MGAs) or alternative means of securitisation (ILS/ART), in which public-private partnerships may also engage in the future in order to protect areas of particular social relevance. One factor is the increase in new technologies and new devices. An increase to just over US$ 300bn is expected in 2022. This website uses cookies to improve your experience while you navigate through the website. And for some, coverage will simply become unattainable. Doing nothing to prevent cyber threats leaves companies vulnerable to more than just a cyberattack or breach. The UK and US cyber insurance market is rife with complexity. With the increased use of new technologies and the continuous growth of digital dependencies, the prospect of new threat scenarios materialising in the future is a real one. In 2023, CaaS continues to pose a threat, requiring organizations to prioritize defense through employee training, threat intelligence and incident response solutions. Amid changes in the threat landscape, bans on ransomware payments and other cyber-related laws could crop up across the US. Munich Re significantly contributes to a sustainable market, which is essential for our clients. To counter this, companies should adopt quantum-resistant encryption algorithms using quantum random number generators instead of relying on vulnerable traditional pseudo-random number generators. The cookie is used to store the user consent for the cookies in the category "Analytics". 11. On the insurance side, they will invest more in tools for underwriting cyber risk, portfolio management and high-end cybersecurity risk mitigation services to their insureds. First-party cyber coverage protects your data, including employee and customer information. Cyber Insurance trends: pressures, perplexity and precaution The UK and US cyber insurance market is rife with complexity. With all the data and scores at their disposal, insurers are able to quantify their own risk, too, and make better-informed decisions as they navigate the increased demand for their services. In auto insurance, risk will shift from drivers to the artificial intelligence (AI) and software behind self-driving cars. Beyond preparing businesses for cyber insurance, MSSPs can also help insurers in a more direct way. According to The National Association of Insurance Commissioners (NAIC), the number of written cyber insurance policies in force increased by 21.3% from 2019 to 2020. MSSPs prove their worth by running comprehensive assessments over organisations people, processes and technology controls, leaving no stone unturned. Cyber insurance buyers enjoyed expanding coverage terms, plentiful capacity and flat to falling rates in a highly competitive insurance marketplace. Three cybersecurity trends with large-scale implications. It looks like your browser does not have JavaScript enabled. [M] Munich Re / [P] Stanislaw Pytel / Getty Images. Blockchain Security: Blockchain security requires risk assessment, implementation of cybersecurity frameworks, security testing and secure coding to protect against online fraud and cyberattacks, helping ensure the continued growth of blockchain technology. In view of increased vulnerabilities, it is crucial for companies and organisations to have a clear understanding of the threat landscape and ones own weaknesses. Regional opportunities, Latest trends and dynamics . Realize that businesses need cybersecurity insurance like humans need water. Title Insurance Industry outlook switched to negative, Insurtech Lemonade shared Q4 2022 results: premium reached $625 mn, a 64% increase, Insurtech Rootshared Q4 2022 results: written premium a ~23% decrease to $122 mn, Malaysias Insurtech PolicyStreet received license for operate in Australia, Insurtech Kanguro launches pet insurance in Florida, Insurtech Kita secured 4mn led by Octopus Ventures to combating climate change, UNIQA Insurance Group improved 2022 consolidated earnings to EUR 425 mn. However, the heightened cyber risks and exponential growth of ransomware attacks in particular over the last year has led to a hardening of the marketplace. But perhaps the most impactful change in the market is one thathigh-risk industries such as constructionhave long-been warned about: with cyber insurance no longer seen as a mere risk-mitigation tool, it falls to businesses to reduce cyber risk internally before applying for cyber insurance (see Biggest Cyber Unicorn Startups). In addition to providing a better understanding of cyber risks, these methods and tools are used to develop innovative, datacentric solutions that go beyond pure risk transfer. The definition of insurability is key for the sustainability of the market, particularly as regards systemic risks and the extent to which these can be insured. Social engineering tactics involve using manipulation to gain access to cybersecurity weaknesses. At the same time demand for cyber insurance has been increasing, supply has been tightening, as insurers and reinsurers take a step back and reevaluate their risk appetites. These factors have resulted in an overall downward trend in coverage limits. Cyber-insurance pricing increased 10% from a year earlier in January, . [313 Pages Report] The global Cybersecurity Insurance Market size is projected to grow from USD 11.9 billion in 2022 to USD 29.2 billion by 2027, at a CAGR of 19.6 during the forecast period. Do I qualify? Sometimes, cybersecurity and cyber insurance become an afterthought during product launches that focus on implementing the latest and greatest technology, but we need to stay extra vigilant in measuring our . There were more than 700,000 cyberattacks on small businesses in 2020, totaling $2.8 billion in damages, according to the Small Business Administration. Businesses will similarly feel the benefits of MSSPs involvement in the process of seeking cyber insurance, as they will have a reason to work harder to improve their overall cyber resilience, and do so against clear benchmarks. The insurance industry can and must play a role in filling this gap, particularly for smaller businesses, but they also can't do it alone. Rates experienced a significant uptick following the Colonial Pipeline and Kaseya attacks in the summer of 2021. Eighty-two percent of cyber insurers expect pricing to keep going up for the next two years, according to Panaseer's 2022 Cyber Insurance Market Trends Report. Your budget should include obtaining the required insurance policies according to state and local laws. In particular the loss-exposed sectors require proper risk coverage: healthcare, services, retail, the manufacturing sector, government institutions including the education sector, as well as financial services providers. Remote Workforce Security: To ensure secure remote and hybrid work, organizations should implement strong security protocols such as VPNs, multifactor authentication and endpoint/mobile device security solutions. The increase in remote work, cloud usage, AI and the IoT expands the attack surface, making it imperative to stay alert. We continue to see ransomware attacks as the number one cyber threat. Global premiums for cyber insurance are predicted to grow from US$ 9.2 billion in 2022 to US$22 billion by 2025, with some estimates suggesting they could reach over US$ 60 billion by 2029. February 17, 2023 10:07 AM . Risk Placement Services (RPS) says that insurance carriers have adapted to underwriting cyber risks even as threat actors raise or change their tactics. The global cybersecurity as a service (CSaaS) market is expected to register a CAGR of 12.6% in the forecast period (2021 - 2026). Cyberattacks are becoming more sophisticated, but so are insurers. A Key Benefits of Innovation & Applied AI Technologies? By contrast, in a cybersecurity context, attacks can have a snowball effect, with stolen data sold and circulating on the dark web for years. Prominent losses feature in the news cycle and continue to raise awareness of the threat of cyber attacks. DOWNLOAD PDF. CFA Institute does not endorse, promote or warrant the accuracy or quality of ACA Group. In 2023, its importance will only increase, as coverage becomes a seal of approval, indicating the organisations strong cyber security posture to customers, partners and peers. The strength of cyber insurers lies in providing excellent incident response (IR) and offering support when clients need it the most. Cybersecurity Insurance Trends: Key Takeaways for MSPs - N-able Blog 21st February, 2023 A guide to backup retention policy best practices Understanding backup retention policy best practices can help you ensure your backups are available when you need them weeks, months, or even years later. As a result, it has not been uncommon for firms to experience a 100-300% increase in premiums. Communication with clients will also be key so that they have a change to act on those vulnerabilities before their cyber insurance application and get the appropriate level of cover. In general, though, you can expect to pay $25 to $100 per month for cyber insurance, depending on how much coverage you want and which deductible you choose. Prominent losses feature in the news cycle and continue to raise awareness of the threat of cyber attacks. Ransomware-as-service is also on the rise; its predicted to be among the biggest threats to face the cyber market in the next few years. Munich Re is one of the market and opinion leaders in the cyber insurance sector. Making ransom demands is not the sole motivation of attackers of critical infrastructure. They rose by 89% in the fourth quarter of 2021, according to Risk Strategies State of the Market 2022 Report. Not every successful attack is immediately known to or comprehensively understood by the victim. 18. Here's what we know about the size of the cyber insurance industry so far: Market size: According to the latest available data, the global cyber insurance market was worth $7.8 billion in 2020. The third quarter increase was a 40 percentage point rise over the prior quarter, and the largest since 2015. The following is the first blog post in a multi-part series on cybersecurity insurance produced by ACA Aponixs Thought Leadership Team. Data from a global insurance broker indicate its clients' take-up rate (proportion of existing clients electing coverage) for cyber insurance rose from 26 percent in 2016 to 47 percent in 2020 (see figure). 5 Trends to Ride in 2023. Dean Mechlowitz and Bill Haber are the founders of TEKRiSQ, a technology company in Ponte Vedra Beach, Florida. Cyber-Physical Systems (CPS) Security: Cyber-physical systems, including transportation, energy and critical infrastructure, pose security challenges as they become interconnected and autonomous. Ransomware-as-service is also on the rise; its predicted to be among the biggest threats to face the cyber market in the next few years. . The total global economic loss due to cyber-crime is difficult to estimate. The 2021 attack on Kaseya, a software service provider for remote monitoring solutions, resulted in malicious code with ransomware being distributed to approximately 1,500 clients. Premiums flat to 20%. The risk situation remains extremely dynamic. Similar to a deductible, a retention clause specifies the portion of damages policyholders will be responsible for paying before the insurance policy kicks in. The cybersecurity picture continues to evolve, and it's too much for agents to keep up withthat's why they should partner with organizations that can help their clients identify and mitigate network vulnerabilities, implement cybersecurity best practices and assist with monitoring for dangerous activity. Cyber insurance is particularly attractive to small and medium-sized organizations that don't have the means to self-insure and are not confident that their security is likely to withstand attack. The problem is thats not always the case, such as ransomware-as-a-service which are more indiscriminate attacks, he said. Current predictions of the size of the global cyber insurance market suggest rapid growth will occur over the next five years, with the total market size increasing from around eight billion U.S.. According to Cybersecurity Ventures, a ransomware attack occurred every 11 seconds in 2021. Businesses of all sizes should have backup and disaster recovery solutions in place along with incident response plans to protect their data from ransomware attacks. 5G Security: 5G security protects high-speed mobile services for billions of devices and the IoT. While the cyber insurance industry has promising growth, it's also facing alarmingly increased loss activity. Robinson recommends that organizations partner with a third-party assessor to investigate vulnerabilities in their networks. As to preventive services included in the policy, services in the area of network security, backup and password management were mentioned as priorities. Organizations are improving their cyber hygiene. 2) Carrier appetite for cyber risk depends on the insured's cyber hygiene. 1. Not only large corporations recognise the value of effective security management; medium-sized companies, organisations, cities, municipalities and hospitals are likely to continue to invest. Further, 88% of small business owners felt their business was vulnerable to a cyberattack," according to an SBA survey. beyond pure risk transfer) better explained to potential insureds. Demand for cyber insurance is currently growing more steadily than the capacity on offer. During this same time period, the number of cyber policies increased by about 60%. Cyber insurance generally covers liability in the event of an attack (like ransomware) or breach where sensitive data may be compromised, whether that's social security numbers, driver's license numbers, payment card information, and health records; anything that is identifiable to an individual. Future growth: Forecasts suggest that cyber insurance will grow into a $20 billion industry by 2025. Subscribe to our Newsletter to increase your edge. Alarmingly, most companies are not doing enough to protect against the growing cyber threats, despite recognizing they are at risk. 16. To secure CPS such as robots, autonomous vehicles, drones and medical devices, robust security measures such as encryption, authentication and monitoring must be implemented. Analytical cookies are used to understand how visitors interact with the website. But what is good cyber health anyway? In 2021 alone, the Conti group of hackers the most lucrative service provider extorted or earned at least US$ 180m from victims (Chainalysis). For example, ransomware programs can be rented on the dark web for US$ 40 a month. Global supply chains and industry sectors that typically make extensive use of software and hardware from various providers are among those particularly exposed. Scenarios such as the failure of critical infrastructure (e.g. Also, composite cyber insurance pricing increased 48% in the U.S. in the third quarter of 2022, continuing to outpace other products, according to Marsh's Global Insurance Market Index. Price increases. Awareness of the danger is a good thing, but thanks to claims volatility, it isn't as easy as it used to be to secure cyber insurance. Remote Workforce Security: To ensure secure remote and hybrid work, organizations should implement strong security protocols such. Annual premiums have reached an estimated $10 billion and are expected to grow to nearly $23 billion by 2025, according to Fitch Ratings. By acting as a black box within businesses, they can enable the notion of cyber health to be viewed on a more empirical basis than before. Addressing security risks from unsecured IoT devices and sensors is critical to fully realize 5G's potential. So where does increased demand, tighter terms, rising premiums, and lower coverage limits leave firms? 2. In order to ensure the sustainability of cyber insurance, applicants must provide proof of their security standards. To achieve this, the industry must ensure a balance between offering customers attractive solutions and maintaining the necessary sustainability and profitability in the volatile cyber business. Gartner predicts that by 2024, organizations adopting a cybersecurity mesh architecture will reduce the financial impact of individual security incidents by an average of 90%. Supply Chain Security: This is the management of potential risks in the entire supply chain, including external suppliers, logistics and technology. Northeastern University defines multi-factor authentication as a system in which users must use two . As the practice proliferates, its not only individual businesses, but also the wider industry which is set to reap the rewards in 2023 and beyond. The insurance industrys focus lies on clear wording, an adequate level of security and comprehensive transparency on risk information. Munich Re supports government and private-sector initiatives to curb ransomware, such as the Ransomware Task Force (RTF) initiated by the US Institute for Security and Technology, and is also a member of the EU-wide No More Ransom initiative. Independent Insurance Agents & Brokers of America, Inc. Do You Know How Much Insurance Fraud Costs the Industry? To help guide this research and to receive actionable data on premium rates, coverage limits, and more, take the 2022 Aponix Cyber Insurance survey here. Internet of Things in Insurance. In order for the market to remain viable and sustainable, these are necessary changes that need to happen. 1 concern for the third time in four years in the 2022 Travelers Risk Index. 14. 9. To sort through the latest trends, we sat down this month with Emma Werth Fekkas, RVP of underwriting at Cowbell Cyber. Artificial Intelligence (AI) And Machine Learning (ML): AI and ML could potentially pose a cyber threat, as they can be used by attackers to automate and scale their malicious activities. All rights reserved. Lloyds of London announced in August 2022 that it would no longer cover losses as a result of nation state attacks. and refusing to waste time on bad risks.