More businesses are relying on cyber insurance to provide a backstop against intrusion, data loss, and regulatory compliance violations due to cyberattacks. But new research shows that cybersecurity insurance premiums will continue to rise sharply throughout 2021, threatening to undermine one of the best tools in the risk management toolbox.
Here are some of the statistics and predictions that are circulating in the cyber insurance world:
The primary cause of higher insurance premiums is the increase in both the number and severity of cybercrimes, with ransomware attacks playing a particularly prominent role.
Ransomware flourished over the last year, growing as much as 485%, according to industry sources. But it’s not just the raw number of ransomware attacks increased, it’s the size of the payouts that criminals are demanding.
In their H1 2020 Cyber Insurance Report, the leading cyber insurance firm Coalition found that ransomware payouts increased 100% from 2019 to Q1 2020, then jumped an additional 47% from Q1 to Q2 of last year.
In just the last year, businesses have paid some spectacular ransomware fees:
In total, it’s estimated that there will be more than $20 billion dollars in ransomware-related damages by the end of 2021.
While ransomware is one of the key drivers behind higher cyber insurance premiums, it’s not the only factor. In many cases, the uptick in cybercrime is simply revealing existing cybersecurity vulnerabilities that have existed for many years, vulnerabilities that were greatly exacerbated by the recent COVID-19 pandemic and subsequent lockdown.
Another driver of higher cyber insurance premiums is increasing cybersecurity response fees.
The costs associated with cybersecurity intrusion include legal costs, the work of digital forensic experts, cybersecurity expertise, replacement hardware, and may even include a negotiator to help you navigate the ransomware payment process. Each of these adds significant cost to a ransomware recovery effort.
If ransomware and its associated costs continue to rise, it could not only lead to higher insurance premiums, but it could eventually mean the insurance industry is less enthusiastic about providing cyber insurance of any kind — or provides less than comprehensive protection.
While the cyber insurance industry is likely to endure the most recent wave of attacks, insurers and regulators are using the increase in cybercrime to put more pressure on policyholders to strengthen their cybersecurity protections.
Business decision-makers don’t need to view these new requirements as a burden. Instead, they’re a great opportunity to revisit cybersecurity fundamentals and ensure that you’re doing the best you can to protect yourself. They have the added benefit of helping you keep your insurance premiums under control.
At Complete Network, we deliver comprehensive cybersecurity services to businesses in Albany, New York, Charlotte, North Carolina, and Bluffton, South Carolina. Our team of cybersecurity consultants can help you purchase a cyber insurance policy, control the cost of your insurance premiums, build a stronger regulatory program, or help your business achieve any other important security goal.
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