Carriers are little more comfortable [with some sectors] as we see information security postures in a better place overall. In view of current political conflicts, this trend is not expected to wane this year. 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. For example, access to the insurance market requires fundamental resilience-enhancing measures, such as access management, robust network security, the continuous patching of vulnerabilities and the presence of backups. The provider is responsible for securing the infrastructure, access, patching and configuration of hosts/networks, while the customer is responsible for managing users and access privileges, protecting cloud accounts, encrypting/protecting data and maintaining compliance. Although challenges exist with talent shortages, climate risk, increased regulatory requirements, and managing the technology/human balance, insurers can leverage the lessons of the past year to get closer to providing a . 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. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. 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 . Demand for cyber insurance is currently growing more steadily than the capacity on offer. Insurers offer protection and thereby support the productivity and capabilities of insureds. Cyber insurance is no longer deemed a nice-to-have accessory for businesses. Cyber Insurance: Top Five Trends for 2022. In 2021, cyberattacks on all sizes of companies were up 15%, according to a report by ThoughtLab, and the number of material breaches rose by nearly 25%. Cybersecurity, Technology Risk, and Privacy, Mutual Funds, ETFs, and Other Investment Companies, Private Equity Sponsors and Portfolio Companies, take the 2022 Aponix Cyber Insurance survey here, The National Association of Insurance Commissioners, stop covering ransomware payments in France, Business Continuity Planning, Cyber Incident Response Planning, and Business Impact Analysis, Payment and Fraud Risk Assessment Services, Penetration Testing and Vulnerability Assessments, Newly Discovered Phishing Campaigns Evade Anti-Malware Systems. 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. Cyber Espionage: Cyber espionage refers to unauthorized access of sensitive data or IP for economic, competitive or political gain through cyberattacks. 5 Trends to Ride in 2023. But what is good cyber health anyway? 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. 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. 1. By 2027, Business Insider predicts that more than 41 billion Internet of Things (IoT) devices will be . At the same time the vast majority of C-Level respondents confirm that adequate cyber security is still an issue within their companies. 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. DOWNLOAD PDF. 14. 2023 Q1 State of the Cyber 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. As a key part of a comprehensive cybersecurity strategy, cyber insurance helps mitigate risks and offers peace of mind. 13. Munich Re significantly contributes to a sustainable market, which is essential for our clients. Threat actors are increasingly resorting to supply chain security attacks with the potential for widespread impact. Expertise from Forbes Councils members, operated under license. 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. February 17, 2023 10:07 AM . Exacting cybersecurity standards must be defined and complied with by insurers and exposed industry sectors alike. Companies with at least $200 million in cyber insurance account for a bit more than 20% of what is believed to be $5 billion in global cyber insurance premium, according to internal research. While coverage limits fall and premiums soar, insurers are also expecting their clients to carry more risk through application of retention clauses. Many large enterprises do what it takes to bring their level of risk down to a level they can live with and afford. To continue playing a leading role in shaping the market, Munich Re is pursuing a learning strategy and continuing to invest in dedicated cyber teams and expertise. Phishing And Social Engineering: These attacks manipulate individuals through deceit. Munich Re expects these rules and regulations to be focused mainly to the issue of ransom payments and dealings with cryptocurrencies. They will make endorsements around the vulnerabilities scanned, and if not addressed, these could impact an organizations coverage. Join 300,000 other insurance professionals today. The failure of cloud services or a multi-client data breach, for example, are covered. In fact, the chief executive of Zurich, one of Europe's largest . Identity And Access Management (IAM): IAM security manages digital identities and controls access to data, systems and resources to ensure IT security. As we look ahead, these are the top five trends we anticipate seeing in 2022. Public awareness of digital vulnerabilities has heightened with the growth in number of serious attacks and losses. 1 concern for the third time in four years in the 2022 Travelers Risk Index. 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. 4. 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. But they have gotten out of certain industry groups that are poor performers, such asK-12 school districts, or cities and municipalities.. While often retention policies are being demanded by the insurers, some policy applicants are willingly taking on higher retention rates in the hopes of minimizing their premium hikes. The cybersecurity service provider Gartner estimates that, by 2025, 60% of companies will deem cybersecurity to be a key component in their IT procurement evaluation process. Logic would tell you that the bad guys wouldnt attack entities because theres no money for them to get. We also use third-party cookies that help us analyze and understand how you use this website. The cookie is used to store the user consent for the cookies in the category "Other. In order to ensure the sustainability of cyber insurance, applicants must provide proof of their security standards. 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. Big Data security solutions must offer real-time analysis and monitoring and be designed to avoid performance degradation, which leads to delays in data processing. Munich Re supports insureds and companies in developing their own resilience and responsiveness and thereby enables them to satisfy the preconditions for access to the cyber insurance market. Cyber product offerings reached significantly more decision-makers in 2022 than in the previous year (42% received an offer, compared with 34% in 2021). These incidents can do a lot of damage to a company's network and result in serious costs to the business. Insurers will have a busy year as rapid growth is expected to continue. But such measures could have immense bearing on public entities, which are amongthe least prepared for cyberattacks. Independent Insurance Agents & Brokers of America, Inc. Do You Know How Much Insurance Fraud Costs the Industry? 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. In 2023, CaaS continues to pose a threat, requiring organizations to prioritize defense through employee training, threat intelligence and incident response solutions. 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 Munich Re's opinion, 2021 was not an exceptional year from a cyber perspective. Cyber insurance buyers enjoyed expanding coverage terms, plentiful capacity and flat to falling rates in a highly competitive marketplace. Certain classes exceeding 400%. While AXAs decision only applies to France currently, it has the potential to open the door for other insurers to follow suit in the future. 3 Cyber Insurance Trends That Agents Need to Know for 2023. A handful of accelerating technology trends are poised to transform the very nature of insurance. So where does increased demand, tighter terms, rising premiums, and lower coverage limits leave firms? Alongside lower coverage limits, some insurers are reconsidering coverage altogether for certain cyber incidents such as ransomware. Prioritized security measures, such as changing default passwords, prevent threats like Mirai malware. According to BusinessToday, cyber attacks increased by 50% in 2021 compared to the previous year. Global supply chains and industry sectors that typically make extensive use of software and hardware from various providers are among those particularly exposed. Read more eBook 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). In their analysis of cybersecurity insurance filings in statutory financial statements, Fitch estimates that "Industry DWP for cyber coverage in standalone and package policies increased by over 22% in 2020 to approximately $2.7 billion." There were more than 700,000 cyberattacks on small businesses in 2020, totaling $2.8 billion in damages, according to the Small Business Administration. 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. Contact our team to learn more about how we can help your firm protect and grow your business. Cyber Insurance trends: pressures, perplexity and precaution The UK and US cyber insurance market is rife with complexity. The common trend among insurers today is to look at what controls businesses have in place and how responsive they might be in the event of a cyberattack. Cybersecurity Skills Shortage: The evolving threat landscape is leading to a shortage of cybersecurity professionals, with an estimated gap of 3.5 million globally. The challenges for companies are enormous. Subscribe to our Newsletter to increase your edge. The problem is thats not always the case, such as ransomware-as-a-service which are more indiscriminate attacks, he said. 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. Carriers are enhancing risk engineering and risk management capabilities. Use of multi-factor authentication. However, you may visit "Cookie Settings" to provide a controlled consent. Fraudulent Funds Transfer (FFT) is a type of cyber-attack where criminals use social engineering tactics to trick Accounts Payable (AP) staff into transferring funds to illegitimate bank accounts.. FFT is closely linked with Business Email Compromise (BEC). Some decreases in the 5% range on more favorable . To sort through the latest trends, we sat down this month with Emma Werth Fekkas, RVP of underwriting at Cowbell Cyber. 5 key cybersecurity trends for 2023. It does not store any personal data. 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. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". Cyber Insurance: To safeguard against financial losses from a data breach, organizations may obtain cyber insurance. OEM manufacturers and developers must prioritize IoT security to secure vulnerable devices. The increase in the number and severity of cyber attacks in 2020 and 2021 has triggered significant changes to the cyber insurance marketplace. Two new phishing tactics have successfully evaded anti-malware systems: PY#RATION and Blank Image Attacks. 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. The cyber insurance market is hardening and becoming more mature as years pass and the market shifts and accommodates to new trends and data points. These exclusions must be worded transparently and unambiguously. The results show a further increase in the potential for integrated solutions from insurers in the market. On the one hand, UK businesses face a plethora of pressures from rising cyber insurance premiums an increase of66%year-on-year by 2022 Q3 and shrinking coverage (see about Global Cyber Market). According to our primary respondents' research, the Cyber Insurance market is predicted to grow at a CAGR of roughly 24.90% during the forecast period. Throughout these investigative processes, insurers are working more closely with cybersecurity professionals to better understand where cyber risks lie at an organization. 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. The reason for this is simple: Cyber claims frequency and severity are increasing, which means carriers must improve their profitability to remain viable in this evolving segment. 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. and refusing to waste time on bad risks. 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. Experts predict that the increasingly agility and professionalism of cyber criminals will allow them to earn more than the global drugs trade. This is the dilemma both insurers and businesses will grapple with in 2023. These cookies will be stored in your browser only with your consent. Cyberattacks are increasing every year as bad actors find easy targets in companies of all sizes, particularly small to medium-sized businesses. And payouts are costly to insurers. 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. Extortionists obtained ransoms averaging US$ 118,000 per successful attack (as compared to US$ 88,000 in 2020 according to Chainalysis). Insurtech cyber investments Where companies will be spending budgets on cyber security in 2021 $1.74bn on infrastructure spending $64.2bn on security services $545m on cloud security $10.4bn on identity access management solutions $11.6bn on security network equipment *via Feedzai Financial Crime Report Q1, 2021 Data protection It is virtually impossible to quantify the risk. They will make endorsements around the vulnerabilities scanned, and if not addressed, these could impact an organizations coverage. Employee awareness and reporting of anomalies to IT administrators can greatly reduce the risk of a successful attack. Now, three quarters into 2022, the market is clearly showing signs of improvement: New capacity and insurers continue to enter the market. Crucially, they can manage a continuous testing and improvement programme affordably. Organizations in and outside of Ukraine have faced various cyber threats, including large-scale DDoS attacks, heightened malware activity, targeted phishing campaigns, disinformation operations and attacks on cyber-physical systems. Compare roughly one-quarter (26%) in 2016 to one-half (47%) in 2020. MSSPs prove their worth by running comprehensive assessments over organisations people, processes and technology controls, leaving no stone unturned. Cybersecurity insurance claims are increasing. Despite the high level of awareness of the cyber threat there is still a gap when it comes to actual insurance of the risk. Until companies make cyber wellness and cyber hygiene a top priority in the boardroom and a key component of their brand, year-on-year premiums will continue to explode. Doing nothing to prevent cyber threats leaves companies vulnerable to more than just a cyberattack or breach. Munich Re is one of the market and opinion leaders in the cyber insurance sector. At Munich Re, the development of know-how on data analytics and tools for processing relevant internal and external data is long underway. Customer notication and call center services. Opinions expressed are those of the author. In other words, companies that aren't proactive about cyber risk management will not be considered insurable going forward. An increase to just over US$ 300bn is expected in 2022. 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. While 88% of company boards regard cybersecurity as a business risk rather than solely a technical IT problem," only 13% of boards have actually instituted a cybersecurity-specific board or committee, according to a cybersecurity report from Gartner. 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. The Cyber Insurance market was. 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. 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. 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. Realize that businesses need cybersecurity insurance like humans need water. This example lends itself to comparison to the digital world: despite growing awareness, the actual implementation of cybersecurity still leaves a lot to be desired. Insurtech Insights is worlds largest insurtech community, connecting industry executives, entrepreneurs and investors. 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. 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 range of cyber products still needs to be made better publicised and the additional benefits of those products (i.e. 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. 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. The reasons for the rise in cyberattacksand the focus on protecting against themis multifold, Noubir says. However, trends at the end of 2022 suggest that there . These clauses, substantially equivalent in terms of content, will be used in policies going forward to meet specific cyber risk requirements. In other industries, reputational damage tends to occur in the aftermath of one-off events such as natural disasters and can often be predicted to some extent (see Global Cyber Crime, Fraud & Ransomware Survey). 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. 2. 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 problem is that they need much more information than is currently available to them, something akin to the wealth of empirical data health and car insurers can benchmark against (see Top Cybercrime Predictions for 2023). Annual premiums have reached an estimated $10 billion and are expected to grow to nearly $23 billion by 2025, according to Fitch Ratings.