By Katie Bratek, Marketing Specialist
The internet is great. It has brought us together into a global community. It allows us access to information, media, food, and clothing from around the world with the click of a button. It allows businesses to collect payments in an instant, and it provides organizational tools at your fingertips. But where there is light, there is also dark. Bad actors, the dark web, ransomware, identity theft … How do we protect our information? Cyber liability insurance has become paramount to securing our assets both personally and professionally. And, after 3 years of hardening conditions, the cyber insurance market has finally begun to stabilize.
In the first quarter of 2022, the FBI released its 2021 Internet Crime Report detailing all of the 2021 loss. They reported potential ransomware losses exceeding $6.9 billion. While ransomware is the flashy older brother of cyber claims, the most frequently reported incidents are business email compromise and the criminal use of crypto currency. The FBI reported that business email compromise schemes resulted in 19,954 complaints with an adjusted loss of almost $2.4 billion.
According to a study done by Cisco, cyber and digital losses are best sorted into the following categories:
- Ransomware Attacks: Ransomware incidents increased significantly, affecting organizations of all sizes. Cybercriminals demanded substantial ransoms, leading to higher claim volumes.
- Business Email Compromise (BEC): BEC attacks, where attackers impersonate executives or vendors to manipulate employees into transferring funds, contributed to the rise in claims.
- Funds Transfer Fraud (FTF): Unauthorized transfers of funds due to compromised credentials or fraudulent instructions led to financial losses and subsequent claims.
- Supply Chain Vulnerabilities: Attacks on supply chain partners impacted multiple organizations, resulting in coordinated claims.
- Increased Awareness and Coverage: As awareness of cyber risks grew, more companies purchased cyber insurance, leading to a higher number of claims.
- Complex Regulatory Environment: Evolving data protection laws and regulations prompted organizations to report incidents and seek insurance coverage
But what does this mean for us as insurance professionals? According to a study completed in 2022 by Fitch Ratings, there has been a robust growth in the cyber insurance market with improved cyber-loss rations amongst carriers. Some key findings from this report are as follows:
- Losses increased by 300% since 2018
- 2021 premium growth exceeded the change in incurred losses and the stand-alone cyber loss ratio improved to 65% from 72% in 2020
- Fitch estimates that standalone and packaged cyber direct written premiums increased by 74% in 2021 to nearly $5 billion compared with 9% growth for P/C industry overall
- Standalone cyber coverage increased by 92% in 2021
A comprehensive summary of recent losses related to cyber incidents was summarized in the Poneman/IBM Security 2023 cost of a data breach report. Cost of a data breach 2023 | IBM
To answer my previous question, as insurance professionals we are doing more harm than good by not promoting this critical coverage. In an age where an account round not only increases production and retention but provides the information, as well as an opportunity to provide value and knowledge to our insureds, we would be remiss in not offering a quote at every renewal or on every new business proposal.
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