By Max Dorfman, research writer, Triple-I
Directly written premiums for cyber insurance increased sharply in 2021from 2020, spurred by non-life activity and cyber incidents. According to a recent analysis by S&P Global Market Intelligence, direct-written premiums almost doubled, to about $ 3.15 billion in 2021, from $ 1.64 billion the previous year. Directly written premiums for packaged cyber insurance increased by about 48 percent, to $ 1.68 billion in 2021 from $ 1.14 billion in 2020.
The average loss ratio for independent insurance decreased to 65.4 percent in 2021, from 72.5 percent in 2020, while the premium increased significantly. Analysts believe that this may be a sign that insurance companies are becoming more disciplined and conservative in their cyber guarantee. Nevertheless, Fitch Ratings analysts noted that cyber insurance is the fastest growing segment for US real estate and non-life insurance companies, with prices rising at a “significantly higher” rate than other commercial business areas.
Cybercrime is on the rise
According to the FBI’s Internet Crime Complaint Center (IC3) 2021 Internet Crime Report, the department had 3,729 complaints about ransomware, with over $ 49.2 million in adjusted losses. In total, $ 6.9 billion in losses coincided with more than 2,300 average daily complaints. The most common complaint was phishing, which shows a trend that has continued for some time.
In fact, several data points show the increasingly difficult situations that organizations face when it comes to cyber attacks and the need for companies to become more vigilant. These include:
According to an analysis by Fortune Business Insights, the compound annual growth rate of cyber insurance can increase by 25.3 percent from 2021 to 2028, with the market growing to $ 36.85 billion.
However, Tom Johansmeyer, a cyber insurance expert, told the Harvard Business Review in March 2022, “Cyber insurance is harder for companies to find than a year ago – and it’s likely to be harder. Although cyber insurance is becoming more of a must for companies, the explosion of ransomware and cyberattacks that it will also be a less attractive business for insurance companies. ”
Organizations should combine these policies with a strong cyber security plan to fully protect against the possibility and consequences of an intrusion.
Triple-I “State of the Risk” Issues Briefly about Cyber
Cyberattacks are growing in frequency, severity and complexity
Because cybercriminals act more like companies, insurance companies need to think more like criminals