Cyber insurance premiums increased over 80% in Q1 2022
Gallagher predicts customers can more policy limits as insurers become less willing to fully cover increasing ransomware costs.
New attack strategies from hackers, escalating ransomware attacks and growing geopolitical tensions are just a few of the factors that have driven cyber insurance premiums upward through Q1 2022, says a recent report from Gallagher.
While the median rate increase for cyber coverages was 37%, they found the top 25% of companies saw cyber rate increases of 83.3% in the first quarter of 2022. These premium increases have happened regardless of the insured’s industry or the size of their organization.
When it comes to who is most at risk of cyberattack, Gallagher’s research revealed evidence hackers have begun to favor victims that can act as a gateway to additional targets. This includes entities like global software providers, email platforms and large-scale meat and fuel suppliers.
As cyber premiums have climbed, policy limits have shrunk. The report states carriers have attempted to limit exposure by limiting capacity, which has led to policy limits only about half as large as those offered in the 2021 renewal cycle. Carriers have also attempted to limit risk by enacting preventative measures, including multifactor identification, better data backup practices, privileged account management and employee training. Organizations that have failed to enact these kinds of precautions have seen some of the highest rate increases – as high as 300%.
Widespread cyber insurance is still a new concept to many organizations, and brokers and underwriters are still debating what exactly these policies should cover and how insureds need to adapt their cybersecurity strategies to keep up with changing threat trends.
Gallagher predicts cyber insurance underwriting will continue to intensify, and customers can expect more restrictive coverage terms, mandatory sublimits and language that specifically excludes certain widespread or global cyber incidents as insurers become less willing to fully cover increasing ransomware costs. These factors may influence insureds to take a more active role in enacting policies and practices that more actively protect them from cyber threats.
A full copy of Gallagher’s Spring/Summer Insurance Market Report is available here.