Cyber Insurance Claims are Rising – What Does the Mean for SMBs?

Rising Claims Over Last Five Years

Over the last five years, the landscape of cyber insurance claims has evolved significantly due to increasing cyber threats and changing business practices.   According to IT security provider, Delinea, 62% of businesses filed a cyber Insurance claim in the last 12 months.  Further, over 27% filed more than one claim during that period.

Here are some notable trends:

Rising Frequency of Claims: The frequency of cyber insurance claims has increased as cyberattacks, including ransomware, data breaches, and phishing scams, have become more prevalent. Businesses of all sizes are experiencing more frequent and severe cyber incidents.

Higher Claim Amounts: The costs associated with cyber incidents, including data breaches and ransomware attacks, have risen. As a result, the amounts claimed have increased, reflecting the growing financial impact of these attacks. The costs include not only direct ransom payments but also legal fees, notification costs, and lost business.

Increased Premiums: As the number of claims and their severity have grown, insurance premiums have risen. Insurers are adjusting their pricing models to account for the heightened risk and potential financial exposure.

Stricter Underwriting Criteria: Insurers are applying more stringent criteria for underwriting cyber insurance policies. Companies are often required to demonstrate robust cybersecurity measures and protocols to qualify for coverage. This includes having up-to-date security software, regular vulnerability assessments, and employee training programs.

Greater Focus on Ransomware: Ransomware attacks have become a dominant concern for cyber insurers. Policies and coverage terms have evolved to address the specific challenges posed by ransomware, including coverage for ransom payments, business interruption losses, and extortion-related costs.

Increased Demand for Coverage: There has been a growing demand for cyber insurance as businesses become more aware of the risks and the potential impact of cyber incidents. Companies are increasingly seeking coverage to protect themselves against potential financial losses and reputational damage.

Evolving Policy Terms: Insurance policies have seen changes in terms and conditions, such as exclusions for certain types of attacks, limits on ransom payments, and requirements for incident response plans. Insurers are adapting their policies to better address emerging threats and reduce their risk exposure.

Regulatory and Compliance Pressures: With the rise in cyber incidents, there has been increased scrutiny from regulators. Businesses are facing more stringent compliance requirements related to data protection and cybersecurity, which impacts their cyber insurance coverage and claims.

Focus on Incident Response and Recovery: Insurers are placing greater emphasis on the quality of incident response and recovery plans. Effective response and recovery can significantly influence the outcome of a claim and help mitigate damages.

Summary

These rising cyber insurance trends and risks highlight the growing importance of cyber insurance in the current business environment. This reflects the increased risks associated with cyber threats and the evolving nature of insurance coverage to address these risks.  Companies are increasingly adopting advanced technologies to secure strong cyber insurance coverage, increase preventative measures, and mitigate rising costs.

Ready to learn more about how to use advanced technologies to protect your SMB from cyber attacks, while enhancing your ability to secure strong cyber insurance coverage?  If so, please contact us for a free consultation at (201) 493-1414 or email us [email protected]

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