Cyber Liability Insurance Market Concerns in 2022 | P&C

Cyber Liability Insurance Market Concerns in 2022 | Property & Casualty

The cyber insurance market faces a critical juncture for both insurance carriers and policyholders. While the last few years have seen increased competition among cyber insurance carriers, higher capacity and expanded coverage terms, both 2020 and 2021 saw a rapidly hardening cyber insurance market. Moreover, across industry lines, cyberattacks have surged in both cost and frequency. This increase in attacks has, in turn, resulted in a rise in cyber liability claims and subsequent underwriting losses.

In light of these market conditions, it’s predicted that most policyholders will experience higher cyber liability insurance rates in 2022, with many insureds seeing double-digit rate increases. Apart from increased premium costs, you may also encounter coverage restrictions, further scrutiny from underwriters regarding cybersecurity practices and exclusions or sub limits for losses stemming from specific types of cyber incidents. Coverage will be increasingly difficult to attain for policyholders who fail to demonstrate proper cybersecurity protocols or have experienced previous cyber incidents.

Developments & Trends to Watch

Tightened Underwriting Standards

With cyberattacks surging, cyber insurance carriers have adjusted their underwriting practices to help mitigate the risk of costly claims. In particular, carriers are now requiring more substantial documentation. This may include detailed information related to workplace cyber policies, incident response planning, employee training and security software capabilities.

In addition, some cyber insurance carriers have also decreased their risk appetite and reduced coverage offerings — especially as they pertain to protection for losses stemming from cyber events that are on the rise (e.g., ransomware attacks). To prevent insureds from leveraging their coverage for unintended purposes, some carriers have changed their policy wording to be less ambiguous. This adjustment can help carriers clearly outline the types of cyber events they cover as well as when and how coverage will be triggered.

Elevated Ransomware Concerns

Ransomware attacks have been steadily increasing in recent years; this is likely tied to cybercriminals becoming more sophisticated and developing further avenues for launching these attacks (e.g., ransomware-as-a-service, remote). What’s worse, ransomware attacks often carry higher costs than other types of cyber events. NetDiligence’s annual cyber claims study discovered that ransomware attacks were the largest driver of cyber insurance claims over the last five years. The average ransom demand has risen to $247,000 and the median incident cost has reached $352,000.

Heightened Business Email Compromise (BEC) Risk

BEC 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. According to the latest loss data from Advisen, BEC scams are among the most expensive types of social engineering losses. They’re also on the rise, increasing 58% from 2015 to 2019. The median cost of a BEC loss is $764,000, whichis significantly more expensive than other social engineering losses that average around $580,000.

Insurance Buyer Tips

  • Work with your broker to understand the different types of cyber coverage available and secure a policy that suits your unique needs. Carefully determine whether standalone coverage is necessary.
  • Take advantage of loss control services offered by insurance carriers to help strengthen your cyber measures.
  • Focus on employee training to prevent cybercrime from affecting your operations. Employees should be aware of the latest cyber threats and ways to prevent them from occurring.
  • Establish an effective, documented cyber incident response plan to minimize damages amid a cyberattack.
  • Consider supply chain exposures when establishing your organization’s cybersecurity policies.

We’re Here to Help

Experts predict a 15 to 50% increase in cyber insurance premiums in 2022. Fortunately, you’re not in this alone. We’re here to help you understand the current cybersecurity market and implement risk management strategies to protect your organization. If you have more questions about your cybersecurity insurance coverage or the status of the market, connect with a member of our team

Cyber Liability Insurance Market Concerns in 2022 | Property & Casualtyhttps://www.cbiz.com/Portals/0/Images/GettyImages-1150199386-2.jpg?ver=qo-E_Hjw3xxrsG2IGNL0mg%3d%3dhttps://www.cbiz.com/Portals/0/Images/GettyImages-1150199386-1.jpg?ver=GHvKpAJMW3FG8ur7WlVVtA%3d%3dHere are three cyber liability insurance market trends to watch for, and our best tips for insurance buyers in 2022. 2022-02-28T18:00:00-05:00Here are three cyber liability insurance market trends towatch for, and our best tips for insurance buyers in 2022.Risk MitigationProperty & Casualty InsuranceYes