In this global report from Advisen on the cyber insurance market, brokers and underwriters highlight major trends, including the obstacles keeping businesses uninsured, the rising costs for insureds, and emerging threats for which all parties must prepare.
Barriers to uptake
Many businesses still don’t see themselves as potential victims of cyber attacks. 70% of brokers and underwriters said their main barrier to sales is their clients not understanding their cyber risks properly.
Cost is also a major deterrent. Expensive ransomware claims are driving up the rates for insureds by 5-10%.
Most in-demand coverage
Cyber-related business interruption is the most requested type of coverage by organisations, with extortion and ransom closely following. This was a far less commonly requested form of coverage a decade ago, but ransomware’s growing frequency and appearance in high-profile stories have made people cautious.
Brokers and underwriters report that when renewing policies, organisations are much more likely to request a higher limit on their insurance, highlighting their increased awareness of escalating cyber risk.
Physical damage
Brokers and underwriters disagree on whether cyber insurance policies should cover physical damage or whether it is an area for property insurance.
For the inclusion of physical damage to become industry standard, rates will need to rise - there simply isn’t enough money in cyber insurance to cover the immense costs resulting from risks to property, especially when attacks hit complex infrastructure such as power plants.
Systemic nature of cyber risk
A systems approach can help to understand risks properly - luckily, 91% of underwriters analyse the systemic nature of cyber risk. Modelling scenarios, looking at insureds’ security safeguards, and capturing data to enhance risk aggregation are all means of improving this process.
Meeting the needs of insureds
Current policies only partially solve customers’ problems: 40% of respondents say that policies only partly meet their clients’ needs.
Buying an insurance policy is a demanding process for insureds, often putting them off entirely. Unhelpfully, policies tend to be written in dense and inaccessible language, inconsistent across carriers.
Why does this matter for businesses?
Much anecdotal evidence exists around cyber insurance, mostly from the consumer’s perspective. This report highlights cyber insurance from a different view – the underwriters. Understanding their perspective can help businesses get the most out of their coverage.
To help spur uptake - and market growth - cyber insurance companies should make cyber insurance easier to adopt and outline their policies in accessible language while clearly illustrating the risks at stake.
