Cybersecurity insurance claims are increasing. Demand for cyber insurance is currently growing more steadily than the capacity on offer. Exacting cybersecurity standards must be defined and complied with by insurers and exposed industry sectors alike. 5G Security: 5G security protects high-speed mobile services for billions of devices and the IoT. In the analogue world, it took 15 years for the provision of safety belts in German cars to be made mandatory, and many more years for them to be accepted and fastened by users in every-day life. According to Marsh, in September 2021, clients cyber premium rates per million in coverage increased 174% compared to the 12 months prior. Ultimately, firms who do not provide the proper documentation and/or do not have the required controls in place may not be considered for coverage altogether or may incur higher premiums and/or lower coverage limits to account for their perceived added risk. Analytical cookies are used to understand how visitors interact with the website. Satellites, drones, and real-time data sets will give insurers unprecedented visibility into the risk around facilities . Carriers are little more comfortable [with some sectors] as we see information security postures in a better place overall. For example, on a scale from one to 100, scores of 75 or over may be considered best practice, though in tightly-regulated or high-risk industries, the benchmarks would differ. Social engineering attacks have outpaced ransomware ones this year, fuelled by the global shift to hybrid working. 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. The sustainability of the cyber insurance market can be further improved with better resilience and innovative coverage of residual risks. CFA Institute does not endorse, promote or warrant the accuracy or quality of ACA Group. Ransomware losses have dropped in the past few months, but they have increased in severity. The global cybersecurity as a service (CSaaS) market is expected to register a CAGR of 12.6% in the forecast period (2021 - 2026). In other words, companies that aren't proactive about cyber risk management will not be considered insurable going forward. 7. For the insurance industry, it is therefore vitally important to continue to tailor the range of cyber products to customer requirements and increasing digital dependencies. Keep your journey safe with more . Criminal extortion in cyberspace is becoming ever more professional and complex and is often carried out by agile, coordinated criminal networks. MSSPs prove their worth by running comprehensive assessments over organisations people, processes and technology controls, leaving no stone unturned. Now, three quarters into 2022, the market is clearly showing signs of improvement: New capacity and insurers continue to enter the market. Risk transparency is essential for risk management by companies and organisations. In its 2023 US cyber market outlook, Risk Placement Services (RPS) says that insurance carriers have adapted to underwriting cyber risks even as threat actors raise or change their tactics. A Key Benefits of Innovation & Applied AI Technologies? 2017-2023 ACA Group. The latest trends in ransomware prevention and protection are Zero Trust Policies, Dark Web Monitoring, and Employee Cybersecurity Training with Phishing Simulations. We continue to see ransomware attacks as the number one cyber threat. Likewise, with the rising cost of premiums, some firms themselves are making the decision to reduce their coverage in exchange for a less costly policy. And for some, coverage will simply become unattainable. 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. They should also educate employees on identifying risks and cybersecurity practices, as well as maintaining strong password hygiene. Businesses must and will continue to manage the following issues: Cyber health is not the only unquantifiable factor in the cyber space risk is similarly elusive. Sign up today for ACA news, alerts, and events. Munich Re experts assume that three factors in particular will characterise the threat landscape in 2022: ransomware, supply chain and critical infrastructures. beyond pure risk transfer) better explained to potential insureds. Cyber Insurance: Best practices such as multi-factor authentication (MFA), secure configuration, defined patch periods, and others will be mandated as a precursor to policy underwriting. Such actors are often motivated politically or otherwise to cause maximum disruption or even the destruction of processes and systems, in order to trigger economic and political instabilities. The results show a further increase in the potential for integrated solutions from insurers in the market. Cyber-attacks are up by 93%.In 2020, more than 60% of companies were subject to ransomware demands. The following is the first blog post in a multi-part series on cybersecurity insurance produced by ACA Aponixs Thought Leadership Team. Annual premiums have reached an estimated $10 billion and are expected to grow to nearly $23 billion by 2025, according to Fitch Ratings. Cyber attacks on the healthcare sector up by 71% ISP/MSP up by 67% Communications +51% Government and military sector up by 47% We experienced an all-time high in cyberattacks during 2021, with Q4 taking the most blows. Premium trends Primary. In Munich Res opinion, 2021 was not an exceptional year from a cyber perspective. also, according to NetDiligence's Cyber Claims Study, between 2016 and 2020, the average cost to an insurer for a cybersecurity claim was $145,000 for . However, there is still a lot more to be done to achieve increased cybersecurity and progress has been slow up to now. The cyber insurance market will continue to respond to a changing threat landscape, but also will be shaped by business, economic and regulatory forces. With respect to the scope of cover under policies, respondents would like coverage to extend to data recovery services in an emergency, a 24-hour hotline, legal advice and forensic services. The reasons for the rise in cyberattacksand the focus on protecting against themis multifold, Noubir says. The report contains clear, reliable, and thorough Cybersecurity Insurance Market data and information that will undoubtedly help businesses to develop and boost return on investment (ROI). 9. 12. Some decreases in the 5% range on more favorable . In-depth industry statistics and market share insights of the Cybersecurity Insurance sector for 2020, 2021, and 2022. MSSPs can score organisations cyber resilience based on the effectiveness of their security and data protection processes, the behaviour of their employees and the robustness of their technology infrastructures. Technical cybersecurity solutions for the insurance industry must focus on access controls, data behavior, the encryption of large data volumes, and the prevention of data leaks. In order for the market to remain viable and sustainable, these are necessary changes that need to happen. , and the number of material breaches rose by nearly 25%. 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. 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. This trend is primarily driven by the increase in the number of ransomware gangs, the success of their campaigns, and the absence of consistent security controls and data protections in the enterprise. 1 concern for the third time in four years in the 2022 Travelers Risk Index. The cyber insurance industry has been facing challenges in recent years due to rising rates, mass cyber-attacks, and stricter policy terms. 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. At the same time, cyber-insurance policy providers are indicating that current approaches won't be sustainable forever. In other words, companies that aren't proactive about cyber risk management will not be considered insurable going forward. Both incidents show that, big game hunting, i.e. 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. With October internationally recognised as Cyber Security Awareness Month*, it's a good time to explore some of the key trends in the cyber insurance world. These types of attacks will remain prevalent in 2023, making employee education and training crucial in mitigating risk. The solution wont come from either side, but somewhere else entirely: managed security service providers (see 5 Most Important Cybersecurity Controls). The public sector, including education, also faces fewer options for risk transfer after the pull-out of several carriers from the space due to skyrocketing claims. Digitalisation is advancing in every area of the economy and society. Throughout these investigative processes, insurers are working more closely with cybersecurity professionals to better understand where cyber risks lie at an organization. It is extremely difficult to manage all hardware and software components from multiple providers, each potentially with its own requirements or security standards and to adequately assess the resulting risk from or through the supply chain. Trend No. Beyond preparing businesses for cyber insurance, MSSPs can also help insurers in a more direct way. MSSPs can support insurers first and foremost by helping businesses qualify for cyber insurance more easily. 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. With the increase in the number of cyber incidents and claims filed, the industry has become less profitable. Opinions expressed are those of the author. In Munich Re's opinion, 2021 was not an exceptional year from a cyber perspective. Three cybersecurity trends with large-scale implications. 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. Such a cyber resilience score then gives insurers a clear metric to assess candidates and clients by. Particularly noticeable was the fact that smaller companies and government institutions often continue to be inadequately protected and are therefore more at risk overall. 14. 2. Also referred to as cyber risk insurance or cybersecurity insurance . Insurers are also leaning on supplemental applications related to firms history with ransomware and high-profile cyber breaches as an attempt to piece together firms inherent risk. Alongside lower coverage limits, some insurers are reconsidering coverage altogether for certain cyber incidents such as ransomware. Many large enterprises do what it takes to bring their level of risk down to a level they can live with and afford. To secure CPS such as robots, autonomous vehicles, drones and medical devices, robust security measures such as encryption, authentication and monitoring must be implemented. Critical vulnerabilities grew significantly in 2021, with an increase of approximately 20% (Tenable). Amid changes in the threat landscape, bans on ransomware payments and other cyber-related laws could crop up across the US. Subscribe. 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. 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. 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. The goal in a sustainable market is to establish solutions for cyber risks as a long-term insurance offering, increase insureds resilience and thereby promote the protection of digital economic models. The Cyber Insurance market was. Public awareness of digital vulnerabilities has heightened with the growth in number of serious attacks and losses. In current data compliance dominated economies, the legal complexities . But such measures could have immense bearing on public entities, which are among the least prepared for cyberattacks. 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. By clicking Accept All, you consent to the use of ALL the cookies. This was a trend also observed by Munich Re in the past year. 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. In general, the cyber market as a whole is expected to continue its growth into 2020. All industry sectors are interested in cyber insurance. Since cyber-attacks are inevitable, it has become necessary to get yourself covered under a cyber insurance policy. In our own research on personal cyber insurance, we found that people weren't aware of the real costs of . The U.S. market value for embedded insurance was $5 billion in 2020 and is projected to rise to more than $70 billion in 2025. Certain sectors will also need to work harder to meet cyber insurance requirements. According to a white paper produced by Intel in collaboration with key industry experts and commissioned for the UK insurance industry, there are five key questions that need to be asked: 1. In 2023, CaaS continues to pose a threat, requiring organizations to prioritize defense through employee training, threat intelligence and incident response solutions. This is the nature of their relationship but it is not an exclusive one, since they usually dont work alone. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. 2023 Q1 State of the Cyber Market. The objective of this series is to provide clients with the highest quality insights and expertise on the changing and evolving cyber insurance marketplace. The European Union Agency for Cybersecurity (ENISA) recognised and analysed the increased risk from cyber-attacks on or via supply chains in its Threat Landscape for Supply Chain Attacks report. 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. It reveals what's driving the increase in premiums and how the market will evolve in response to growing threats such as ransomware. However, these policies were never priced to account for cyber warfare thats accompanying an armed conflict, or major cloud breaches that could simultaneously affect millions of cyber policyholders at the same time, Robinson said. In recent years, the Department of Homeland Security's (DHS) National Protection and Programs Directorate (NPPD) has brought together a diverse group of private and public sector stakeholders - including insurance carriers, risk managers, IT/cyber experts, critical infrastructure owners, and social scientists - to examine the current state of the The implementation of adequate cyber security requires increased investment. By contrast, in a cybersecurity context, attacks can have a snowball effect, with stolen data sold and circulating on the dark web for years. The cookie is used to store the user consent for the cookies in the category "Analytics". Insurance prices rose between 10% and 30% in just the. Organizations must stay informed and compliant with evolving regulations to secure their systems against cyber threats. 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. Cybersecurity must be integrated into software, system design, coding and implementation. Historically, the cyber insurance marketplace had been considered soft, making it relatively easy for firms to obtain coverage at lower premiums. 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. Part of protecting your business is following cybersecurity industry trends, understanding how criminals penetrate systems, and taking the precautions to keep them out. Recovery and replacement of lost or stolen data. Cyber-insurance is expected to become a $20 billion market by 2025. Annual premiums have reached an estimated $10 billion and are expected to grow to nearly $23 billion by 2025, according to Fitch Ratings. Cyber insurance is basically . As we look ahead, these are the top five trends we anticipate seeing in 2022. At the same time the vast majority of C-Level respondents confirm that adequate cyber security is still an issue within their companies. 4. [30] The COVID-19 pandemic is likely to have a significant impact on cyber loss activity. 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. Our approach in cyber insurance is unchanged: disciplined in underwriting and stringent in risk management. The increased public focus on cybersecurity is a positive sign: democratic governments are very much aware of the priority and urgency of the task of improving cybersecurity and are addressing this politically, infrastructurally and legislatively, as the examples of the improvement in national cyber resilience in the USA and the EU Cybersecurity Strategy illustrate. Here are three important things that agents need to know to be successful in the cyber market in 2023: 1) Cybercrime will continue to increase,particularly against small businesses. Its important for agents and brokers to understand that were still in a growth phase, not just in terms of demand and premium, but also in how carriers are managing the risk and its evolution.. Cybersecurity Regulations: Cybersecurity regulations are directives aimed at protecting IT systems and information from cyberattacks such as viruses, worms, phishing and unauthorized access. In Q4 of 2021, Marsh reported 60% of its clients had taken on increased retentions in an attempt to keep their premium rates at bay. The objective will be to refine risk profiles, anticipate and classify trends and learn from claims data. But they have gotten out of certain industry groups that are poor performers, such asK-12 school districts, or cities and municipalities.. If cyberattacks continue to rise, then the cyber insurance market will continue to evolve and change in order to meet the needs of policyholders. DOWNLOAD PDF. 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. The increase in remote work, cloud usage, AI and the IoT expands the attack surface, making it imperative to stay alert. Communication is strengthening among governments, law enforcement, corporations, and . Trend #1: Increase in Demand With the increase in the number and cost of cyber incidents globally, more firms are recognizing they are not immune to attack and subsequently seeing enhanced utility in cyber insurance. 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, according to Steve Robinson (pictured), area president and national cyber practice leader for RPS. IBMs 2021 Cost of a Data Breach Report estimates that the average total cost of a cyber breach is $4.24 million, with the average cost for the financial industry substantially higher at $5.72 million. Use of multi-factor authentication. Multi-factor authentication (MFA) is becoming a key requisite of many insurers alongside other controls such as the presence of an end point detection and response solution, secured and encrypted backups, privileged access management, business continuity and incident response planning, and cybersecurity awareness training to name a few. The cyber-attack was discovered in time, so the population of the town of Oldsmar, near Tampa, was ultimately not in danger. 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. 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. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Digital attacks on energy providers, food providers, hospitals, administrative bodies and other areas of critical infrastructure reached a new peak last year. Supply Chain Security: This is the management of potential risks in the entire supply chain, including external suppliers, logistics and technology. Ransomware losses have dropped in the past few months, but they have increased in severity. In addition, EDR can provide evidence that an organization has taken appropriate measures to protect its environment and data. 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. At Munich Re, the development of know-how on data analytics and tools for processing relevant internal and external data is long underway. 20. Similarly, the number of insurers offering cyber insurance increased by about 35% between 2016 and 2019. Munich Re expects these rules and regulations to be focused mainly to the issue of ransom payments and dealings with cryptocurrencies. OEM manufacturers and developers must prioritize IoT security to secure vulnerable devices.