In Section 4.1.1, OCE describes the core challenges with the current state of the cyber Available to download is a free sample file of the Cybersecurity Insurance report . While brokers and their clients should acknowledge that a lot of hard work has been done, cyber security is an evolving process. Certain classes exceeding 400%. The sustainability of the cyber insurance market can be further improved with better resilience and innovative coverage of residual risks. 5. At the same time demand for cyber insurance has been increasing, supply has been tightening, as insurers and reinsurers take a step back and reevaluate their risk appetites. 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. The general consensus among experts appears to be that criminals and state-motivated actors will continue to exploit the potential of these attack vectors and the criticality of supply chains. All rights reserved. The cyber-attack was discovered in time, so the population of the town of Oldsmar, near Tampa, was ultimately not in danger. 12. 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. 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. To sort through the latest trends, we sat down this month with Emma Werth Fekkas, RVP of underwriting at Cowbell Cyber. Examples include the automotive cybersecurity standard ISO/SAE 21434, which will apply compulsory for all new cars from July 2022, and IEC standard 62443 on cybersecurity in industry and automation. It does not store any personal data. 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. 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. CIS thought leaders identify cybersecurity trends the world might expect in 2021. Read more. 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. Title Insurance Industry outlook switched to negative, Insurtech Lemonade shared Q4 2022 results: premium reached $625 mn, a 64% increase, Insurtech Rootshared Q4 2022 results: written premium a ~23% decrease to $122 mn, Malaysias Insurtech PolicyStreet received license for operate in Australia, Insurtech Kanguro launches pet insurance in Florida, Insurtech Kita secured 4mn led by Octopus Ventures to combating climate change, UNIQA Insurance Group improved 2022 consolidated earnings to EUR 425 mn. Companies are more aware of their cyber risk and are looking at the insurance market to mitigate that risk. 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. Communication with clients will also be key so that they have a change to act on those vulnerabilities before their cyber insurance application and get the appropriate level of cover. Identity And Access Management (IAM): IAM security manages digital identities and controls access to data, systems and resources to ensure IT security. 2017-2023 ACA Group. Similar to a deductible, a retention clause specifies the portion of damages policyholders will be responsible for paying before the insurance policy kicks in. Cyber insurance is an insurance product designed to help businesses hedge against the potentially devastating effects of cybercrimes such as malware, ransomware, distributed denial-of-service (DDoS) attacks, or any other method used to compromise a network and sensitive data. These factors have resulted in an overall downward trend in coverage limits. Artificial Intelligence (AI) And Machine Learning (ML): AI and ML could potentially pose a cyber threat, as they can be used by attackers to automate and scale their malicious activities. At the same time, cyber-insurance policy providers are indicating that current approaches won't be sustainable forever. Price increases. Recovery and replacement of lost or stolen data. Cyber Insurance: To safeguard against financial losses from a data breach, organizations may obtain cyber insurance. Independent Insurance Agents & Brokers of America, Inc. Do You Know How Much Insurance Fraud Costs the Industry? For example, the research shows a clear appetite for transforming . Crucially, they can manage a continuous testing and improvement programme affordably. Historically, the cyber insurance marketplace had been considered soft, making it relatively easy for firms to obtain coverage at lower premiums. By contrast, in a cybersecurity context, attacks can have a snowball effect, with stolen data sold and circulating on the dark web for years. According to ENISA, the number of supply chain attacks quadrupled in 2021 compared with 2020. The third quarter increase was a 40 percentage point rise over the prior quarter, and the largest since 2015. Slowly but surely, though, security . ACA Aponixoffers the following solutions thatcan help your financial institution develop, implement, and maintain the required information security program: The SEC's Division of Examinations released its annual exam priorities, which focus on compliance, fraud prevention, risk monitoring, and informing policy. Carriers have basically raised the bar for entry for cyber insurance, increasing the information security requirements for organizations to qualify, Robinson toldInsurance Business. As a result, insurers are focusing more intensely on risk selection by asking more questions and requiring more documentation to evaluate firms cyber programs. Annual premiums have reached an estimated $10 billion and are expected to grow to nearly $23 billion by 2025, according to Fitch Ratings. Opinions expressed are those of the author. And while attacks on large organizations like the Colonial Pipeline have captured the headlines, in fact 50% to 70% have targeted small and medium-sized companies, underscoring the wide reaching implications of this threat. Looking to 2022 and beyond, it is forecasted firms will continue to experience higher premiums as insurers respond to evolving cyber threats. January 28th is Data Privacy Day, a reminder that organizations should review their privacy obligations. Lloyds of London announced in August 2022 that it would no longer cover losses as a result of nation state attacks. 2023 Q1 State of the Cyber Market. 18. In order for the market to remain viable and sustainable, these are necessary changes that need to happen. However, trends at the end of 2022 suggest that there . This development affects a multitude of sectors, including the insurance sphere. 1 concern for the third time in four years in the 2022 Travelers Risk Index. Cyberattacks are increasing every year as bad actors find easy targets in companies of all sizes, particularly small to medium-sized businesses. In current data compliance dominated economies, the legal complexities . Munich Re budgets for particularly critical digital dependencies, e.g. In order to ensure the sustainability of cyber insurance, applicants must provide proof of their security standards. Compared with the previous year, thesurvey shows that cyber insurance is becoming increasingly popular. Social engineering tactics involve using manipulation to gain access to cybersecurity weaknesses. 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. The cookie is used to store the user consent for the cookies in the category "Other. Ransomware business reached a new peak last year and is attracting more and more criminals. 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 Insurance trends: pressures, perplexity and precaution The UK and US cyber insurance market is rife with complexity. However, as we reported last year, the cyber insurance . Business decision-makers cited cyber threats as their No. 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). Quantum Computing: Quantum computing threatens traditional encryption methods used for secure data protection. An increase to just over US$ 300bn is expected in 2022. In 2023, CaaS continues to pose a threat, requiring organizations to prioritize defense through employee training, threat intelligence and incident response solutions. 2) Carrier appetite for cyber risk depends on the insured's cyber hygiene. But such measures could have immense bearing on public entities, which are amongthe least prepared for cyberattacks. Global supply chains and industry sectors that typically make extensive use of software and hardware from various providers are among those particularly exposed. Digital Life Insurance. 7 Important Cybersecurity Trends. RPS pointed to several themes in the cyber insurance market for the new year: Sophisticated underwriters are using third-party scanning technologies to help detect security weaknesses. 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. Certain sectors will also need to work harder to meet cyber insurance requirements. Based on estimates from Fitch, a credit-rating agency, insurance company payouts on claims, known as the direct loss ratio, jumped from 47 cents for every dollar in earned premiums in 2019 to 73 cents in 2020. Analytical cookies are used to understand how visitors interact with the website. By sharing their tools and expertise, criminal groups enable other perpetrators with little know-how of their own to carry out ransomware attacks and thereby help to finance established ransomware groups. In 2021, it was estimated approximately US$ 6tn. Future growth: Forecasts suggest that cyber insurance will grow into a $20 billion industry by 2025. /etc/designs/munichre/mrwebsites/topics-online/current/css/fix.aem-editor.css, Munich Re: Global Cyber Risk and Insurance Survey 2022, Cybersecurity Ventures: Global Cybersecurity Spending To Exceed $1.75 Trillion From 2021-2025, European Council / Council of the European Union: Cybersecurity: how the EU tackles cyber threats, Bundesamt fr Sicherheit in der Informationstechnik (BSI) Lagebericht 2021: Bedrohungslage angespannt bis kritisch, Cybersecurity & Infrastructure Security Agency: 2021 Trends Show Increased Globalized Threat of Ransomware, Tenable: 2021 Threat Landscape Retrospective, Lloyd's Market Association: Cyber War and Cyber Operation Exclusion Clauses, European Union Agency for Cybersecurity (enisa): Threat landscape for supply chain attacks. These exclusions must be worded transparently and unambiguously. Axis: There was a 404% increase in ransomware demands from It looks like your browser does not have JavaScript enabled. Cyber insurance is fundamental for the successful digitalisation of the economy. Read more eBook They will make endorsements around the vulnerabilities scanned, and if not addressed, these could impact an organizations coverage. Cyber insurance buyers enjoyed expanding coverage terms, plentiful capacity and flat to falling rates in a highly competitive marketplace. Ransomware losses have dropped in the past few months, but they have increased in severity. Both incidents show that, big game hunting, i.e. Meanwhile, victims and their insurers scramble to try to stay one step ahead of the bad guys, as rates rise - then rise some more. Cyber insurance may seem like uncharted territory, as threats are hard to anticipate and risk remains elevated. There were more than 700,000 cyberattacks on small businesses in 2020, totaling $2.8 billion in damages, according to the, . Cybersecurity insurance claims are increasing. Current predictions of the size of the global cyber insurance market suggest rapid growth will occur over the next five years, with the total market size increasing from around eight billion U.S.. IBMs 2021 Cost of a Data Breach Report estimates that the average total cost of a cyber breach is $4.24 million, with the average cost for the financial industry substantially higher at $5.72 million. Making ransom demands is not the sole motivation of attackers of critical infrastructure. 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. The failure of cloud services or a multi-client data breach, for example, are covered. There were more than 700,000 cyberattacks on small businesses in 2020, totaling $2.8 billion in damages, according to the Small Business Administration. We continue to see ransomware attacks as the number one cyber threat. This cookie is set by GDPR Cookie Consent plugin. Your budget should include obtaining the required insurance policies according to state and local laws. 5 Trends to Ride in 2023. 6: Distributed decisions Executive leaders need a fast and agile cybersecurity function to support digital business priorities. Munich Res current Global Cyber Risk and Insurance Study shows that the proportion of decision-makers who are seriously worried about potential cyber-attacks on their companies has increased significantly to 38%, compared with the previous years figure of 30%. To secure CPS such as robots, autonomous vehicles, drones and medical devices, robust security measures such as encryption, authentication and monitoring must be implemented. It reveals what's driving the increase in premiums and how the market will evolve in response to growing threats such as ransomware. These cookies ensure basic functionalities and security features of the website, anonymously. While ransomware attacks get the biggest headlines, most cyberattacks occur because of a simple phishing campaign where an employee clicks a bad link or sends proprietary information. The range of cyber products still needs to be made better publicised and the additional benefits of those products (i.e. This cookie is set by GDPR Cookie Consent plugin. Subscribe. Those agencies that can differentiate themselves in the evolving cyber market stand to reap the rewards for years to come. In 2021, cyberattacks on all sizes of companies were up 15%, according to a report by. Augmented Reality/Virtual Reality (AR/VR) Security: As AR/VR usage increases, securing these technologies and the data they handle must be a priority to prevent the hacking and theft of sensitive information like credit card data and passwords through subtle facial movements recorded during speech. 11. By contrast, a standard business impact assessment can set a business back many thousands of pounds, putting them out of pocket before they can get any true value for their money. 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. This shortage will continue to be a concern in 2023, forcing companies to invest in training and retaining talent or outsourcing cybersecurity tasks. Remote Workforce Security: To ensure secure remote and hybrid work, organizations should implement strong security protocols such. Only then can they protect themselves through targeted risk management. 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%. Phishing uses fake websites to obtain personal information. The goal in a sustainable market is to establish solutions for cyber risks as a long-term insurance offering, increase insureds resilience and thereby promote the protection of digital economic models. Managed security service providers (MSSPs) can do this for them, and in 2023, their role will become more pronounced. Munich Re is one of the market and opinion leaders in the cyber insurance sector. Sign up today for ACA news, alerts, and events. In particular the loss-exposed sectors require proper risk coverage: healthcare, services, retail, the manufacturing sector, government institutions including the education sector, as well as financial services providers. Doing nothing to prevent cyber threats leaves companies vulnerable to more than just a cyberattack or breach. Premium trends Primary. Several leading cyber insurance carriers documented these trends in their own studies. Low limits and payouts, along with the 2018 underwriting trends, indicate that while cyber insurance customers are buying more cyber insurance with higher limits than in the previous 2 years, they are not getting what they want. Cyber product offerings reached significantly more decision-makers in 2022 than in the previous year (42% received an offer, compared with 34% in 2021). The cyber insurance market has never been more confusing. 4. Threat actors are increasingly resorting to supply chain security attacks with the potential for widespread impact. The Global Cyber Security Insurance market is anticipated to rise at a considerable rate during the forecast period, between 2023 and 2029. . 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. Cybersecurity authorities in the USA, the UK and Australia are also seeing a worldwide increase in the threat to critical infrastructure. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. The definition of insurability is key for the sustainability of the market, particularly as regards systemic risks and the extent to which these can be insured. The global cybersecurity as a service (CSaaS) market is expected to register a CAGR of 12.6% in the forecast period (2021 - 2026). These clauses, substantially equivalent in terms of content, will be used in policies going forward to meet specific cyber risk requirements. But they have gotten out of certain industry groups that are poor performers, such asK-12 school districts, or cities and municipalities.. In view of current political conflicts, this trend is not expected to wane this year. Digitalisation is advancing in every area of the economy and society. 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. There are too many cybersecurity jobs and too few cybersecurity professionals. In Munich Re's opinion, 2021 was not an exceptional year from a cyber perspective. In general, the cyber market as a whole is expected to continue its growth into 2020. An adequate level of cybersecurity increases insureds resilience and, at the same time, is a prerequisite for access to the insurance market. The cookie is used to store the user consent for the cookies in the category "Analytics". Do I qualify? Ransomware: A malicious software that encrypts files and demands ransom for their decryption, ransomware attacks pose a significant threat in 2023. Digital attacks on energy providers, food providers, hospitals, administrative bodies and other areas of critical infrastructure reached a new peak last year. Global Cyber Risk and Insurance Survey 2022, More action required for higher cyber resilience, Up-to-date information - directly to your mailbox. Risk Placement Services (RPS) says that insurance carriers have adapted to underwriting cyber risks even as threat actors raise or change their tactics. Ultimately, firms who do not provide the proper documentation and/or do not have the required controls in place may not be considered for coverage altogether or may incur higher premiums and/or lower coverage limits to account for their perceived added risk. This cookie is set by GDPR Cookie Consent plugin. Our approach in cyber insurance is unchanged: disciplined in underwriting and stringent in risk management. Cyber-insurance pricing increased 10% from a year earlier in January, . Amid changes in the threat landscape, bans on ransomware payments and other cyber-related laws could crop up across the US. On the other hand, insurers can only do so much to help businesses get their house in order. The cyber insurance market has transitioned over the last few years: Capacity has tightened, rates continue to rise, and underwriters are looking much more closely at what risks they will write. The cyber insurance industry has been facing challenges in recent years due to rising rates, mass cyber-attacks, and stricter policy terms. For the insurance industry, it is therefore vitally important to continue to tailor the range of cyber products to customer requirements and increasing digital dependencies. Alarmingly, most companies are not doing enough to protect against the growing cyber threats, despite recognizing they are at risk. Amid changes in the threat landscape, bans on ransomware payments and other cyber-related laws could crop up across the US. For example, on a scale from one to 100, scores of 75 or over may be considered best practice, though in tightly-regulated or high-risk industries, the benchmarks would differ. The total global economic loss due to cyber-crime is difficult to estimate. 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. As a key part of a comprehensive cybersecurity strategy, cyber insurance helps mitigate risks and offers peace of mind. The implementation of adequate cyber security requires increased investment. In this market environment, we will be seeing more and more new players and participants covering risk: InsurTechs, managing general agents (MGAs) or alternative means of securitisation (ILS/ART), in which public-private partnerships may also engage in the future in order to protect areas of particular social relevance. Organizations are improving their cyber hygiene. And for some, coverage will simply become unattainable. Systemic risks and accumulation scenarios require a clearly defined risk appetite, in order for innovative and sustainable protection to be offered to insureds. India was in the top three nations that have experienced a lot of ransomware attacks. Cyber insurance is basically . As to preventive services included in the policy, services in the area of network security, backup and password management were mentioned as priorities. Cybersecurity Ventures forecasts that with further annual rate increases of 15% the loss will amount to roughly US$ 10.5tn in 2025. As we look ahead, these are the top five trends we anticipate seeing in 2022. Social engineering tactics involve using manipulation to gain access to cybersecurity weaknesses. 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. Cyber-insurance trends for 2023. However, you may visit "Cookie Settings" to provide a controlled consent. Realize that businesses need cybersecurity insurance like humans need water. GIPS is a registered trademark owned by CFA Institute. 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. The cookies is used to store the user consent for the cookies in the category "Necessary". Experts predict that the increasingly agility and professionalism of cyber criminals will allow them to earn more than the global drugs trade. Particularly noticeable was the fact that smaller companies and government institutions often continue to be inadequately protected and are therefore more at risk overall. Prompt injection attacks on AI chatbots can reveal sensitive information about their inner workings and pose a significant threat to the security of the system. Additionally, with the growing prevalence of AI chatbots like ChatGPT, employees must be vigilant when sharing confidential information with these tools. So where does increased demand, tighter terms, rising premiums, and lower coverage limits leave firms? Key trends in the current market for cyber insurance include the following: Increasing take-up. Since cyber-attacks are inevitable, it has become necessary to get yourself covered under a cyber insurance policy. , and the number of material breaches rose by nearly 25%. The cyber insurance market will continue to respond to a changing threat landscape, but also will be shaped by business, economic and regulatory forces. 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. While some are optional, some are required. Regional opportunities, Latest trends and dynamics . Not every successful attack is immediately known to or comprehensively understood by the victim. Demand for cyber insurance is currently growing more steadily than the capacity on offer. Companies with at least $200 million in cyber insurance account for a bit more than 20% of what is believed to be $5 billion in global cyber insurance premium, according to internal research. Cybercrime As A Service (CaaS): CaaS is a dangerous business model by which cyber criminals offer hacking services and tools on the dark web for anyone to launch a cyberattack, including nontechnical individuals. Please enable scripts and reload this page. SMBs may find it hard to retain cyber insurance, which is the next trend. The proportion of decision-makers surveyed who were still undecided about arranging cover remained unchanged at 35%. Two new phishing tactics have successfully evaded anti-malware systems: PY#RATION and Blank Image Attacks. Global premiums for cyber insurance are predicted to grow from US$ 9.2 billion in 2022 to US$22 billion by 2025, with some estimates suggesting they could reach over US$ 60 billion by 2029. Rates experienced a significant uptick following the Colonial Pipeline and Kaseya attacks in the summer of 2021. Demand for cyber insurance has grown greatly in recent years. At the same time, only 50% reported being fully prepared" against such an incident, a Provident Bank survey found. Member of the Munich Re Board of Management. How Technology-First Insurers Solves Data Problems?