Recent developments in cyber insurance have been an exciting topic for discussion. The Q4 2021 saw a lot of new companies enter the space, with some exciting as well. As a result, it has become increasingly important to understand how this affects your personal or business needs to protect yourself from potential damages caused by hackers and data breaches. This article will cover recent developments in cyber insurance and what they mean for you going forward.
According to a report released by IBM and the Ponemon Institute in 2021, the average cost of a data breach among the firms examined was $4.24 million per incident in 2021, the highest level in 17 years.
As such, it can be essential to protect yourself against this possibility to avoid having your company go through extensive damages. In addition, when you purchase insurance coverage, the risk becomes spread out much more than if you were left unshielded by any protection plan or policy.
Cyber insurance claims are increasing in frequency, with the most common being theft of intellectual property and business interruption or revenue loss due to a cyber-attack or data breach. While these types of attacks have recently become more common, it has not necessarily led to an increase in claim amounts paid out by providers this year. It could suggest minimal damages were done overall, which would explain why companies may still be making payments on their policy without having any significant issues arise over time.
New York’s Department of Financial Services announced new regulations concerning cybersecurity standards for financial services firms operating within the state earlier this month. The final version was released just last week after two previous drafts were made public in December and May of this year. It is a new development for the insurance industry and will be worth monitoring as we can expect to see more states follow suit in 2020 and 2021 if these regulations prove successful.
Companies are looking for ways to protect their data and prepare themselves in the event of a cyberattack. It has led us to see the increased insured value, especially regarding ransomware
damages that companies need coverage. It will be essential to understand what this means for you as a business owner or policyholder as we continue.
Recent Developments in Cyber Insurance
In Q4 2021, several developments have been made to cyber insurance policies. Here are just a few:
- – The Department of Homeland Security has recently released a report that recommends all business owners purchase cyber insurance due to the recent rise in data breaches and hacking incidents.
- – In the last year alone, 8 million Americans’ personal information was compromised due to security breaches. This increases from 5 million people whose information was stolen in 2018 and 3 million people whose information was taken during 2017. If you think your company might be at risk for this type of attack, ensure you get insurance!
- – Many different policies can be purchased. One of the most common types is an “occurrence” policy, which covers companies for any data breaches or hacking incidents in which their network has been compromised if it occurs during a specific period (usually no more than one year).
In Q4 Price Increases Slowed
[Text Wrapping Break]According to a couple of industry tracking surveys, commercial insurance rates developed at a “somewhat slower” pace in Q4 2020.[Text Wrapping Break]Premium costs increased an average of 10.7% at the end of 2020, according to the P/C Market Survey of the Council of Insurance Agents and Brokers (CIAB) Commercial.[Text Wrapping Break]According to the data, large accounts had to deal with an average premium rise of 13.7 percent, down from 15.3 percent in Q3.[Text Wrapping Break]Price hikes reached their greatest level since 2003 in Q4 2020, according to Willis Towers Watson’s Commercial Lines Insurance Pricing Survey (CLIPS), with average rates soaring more than 10%.
Glimmers of Competition in the Market
Jesse Paulson, managing director of Marsh’s U.S. excess casualty business, said there are “glimmers of competition” for specific coverage lines and accounts during Advisen’s Casualty Insights conference. However, that doesn’t mean rates will stay the same or fall.
According to reports, Paulson stated, “It does imply you’ll have a little bit of more stability in the market, so it shouldn’t be as dramatic as folks saw in 2020.”
Cyber insurance premiums have increased by over 50% since 2015, with no signs of slowing down moving forward. As a result, it is becoming more and more common and necessary from a personal perspective and on behalf of businesses who may want protection against any issues that could arise due to lack of planning or concern about protecting your company’s digital assets. In light of recent trends such as more profound regulations and a continued rise in cybercrime, it will be essential to consider all of the developments occurring within this industry when coming up with a plan moving forward.
While cyber insurance adoption is still not at 100%, but previous years have increased, which may continue going into 2020 and 2021 if we see more regulations such as those put out by New York’s Department of Financial Services. With that being said, companies need to think about how their day-to-day operations rely on technology, both present, and future to weigh options for different types of coverage available, whether you are looking for protection against damages due to hacking or data breaches.
The financial impact resulting from a cyberattack is something we cannot afford to let slip through the cracks. Cyber insurance provides coverage for any expenses associated with such an event, including legal notification costs, credit monitoring services, identity theft protection services, or public relations assistance if needed.
Although more businesses are adopting some form of cyber insurance, it does not necessarily mean companies have made significant investments in this area, as many prefer minimal coverage limits rather than higher premiums for complete value plans. As stated previously, however, there has been growth seen over the past few years. Therefore, even if you are still hesitant about ensuring your business is protected against these types of risks, now could be the time to make changes before worse comes along.
The coverage examples described here are hypothetical claim scenarios and are intended to show the types of situations that may result in claims. These scenarios are not based on actual claims and should not be compared to an actual claim. Whether or to what extent a particular loss is covered depends on the facts and circumstances of the loss, the terms and conditions of the policy as issued and applicable law.