cyber insurance market 2022

Insurers understand that increasing rates alone will not ensure the cyber insurance market's sustainability. Extortionists obtained ransoms averaging US$ 118,000 per successful attack (as compared to US$ 88,000 in 2020 according to Chainalysis). 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. While this market is certainly challenging, it also presents opportunities for more in-depth discussions, and the best agents can leverage this opportunity to show increased value as trusted advisors. Cyber insurance is crucial for enterprise risk management, but its quickly becoming unaffordable. 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. 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. Munich Re expects these rules and regulations to be focused mainly to the issue of ransom payments and dealings with cryptocurrencies. Changes in the process, players, products, pricing and political landscape associated with the cyber insurance market will continue to challenge agents, brokers and insurers in the months to come. The rate increases are still terrible, said, Marsh officials are optimistic the cyber insurance industry, as it matures, can level off. 11Cohn, Carolyn, and Noor Zainab Hussain. In addition to providing a better understanding of cyber risks, these methods and tools are used to develop innovative, datacentric solutions that go beyond pure risk transfer. The once-common 60-day window has dropped to 30 days from renewal for many markets, for two reasons: 1) staffing inadequacy is a real problem, as demand has outpaced many carriers' ability to keep up; and 2) the constantly evolving pace of new threats means carriers want as much time as possible to account for the next discovered systemic vulnerability. Realistically, however, this will not be easy for all suppliers to fully implement, though common security standards, strict risk management in the supplier segment and good documentation of critical dependencies in the supply chain will help reduce the risks. The cybersecurity service provider Gartner estimates that, by 2025, 60% of companies will deem cybersecurity to be a key component in their IT procurement evaluation process. The European Union Agency for Cybersecurity (ENISA) recognised and analysed the increased risk from cyber-attacks on or via supply chains in its Threat Landscape for Supply Chain Attacks report. Get the free daily newsletter read by industry experts. Insurance companies can probably control their losses through limits, deductibles, reinsurance [and]so on, so they have strategies to control their financial losses, Manyem said. Threat actors are increasingly resorting to supply chain security attacks with the potential for widespread impact. One thing that caught the cyber insurance industry unaware is the sudden increase in ransomware attacks, Manyem said. Compared with the previous year, thesurvey shows that cyber insurance is becoming increasingly popular. Public awareness of digital vulnerabilities has heightened with the growth in number of serious attacks and losses. 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. "NC Prohibits Agencies from Paying Ransoms," GCN, April 8, 2022. It isn't clear whether these remarks signal a change in posture (doubtful) or simply recognition that there are instances where, as a business decision, there is no other choice. Cybersecurity and incident response firm Tracepoint adds, "Business email compromise activity has remained consistent, especially as the deadline for personal tax filings in the US draws closer and given that a number of organizations are filing for extensions on the corporate tax deadline which passed on March 15th."4. In November of 2021, North Carolina became the first state to declare it illegal for state agencies and local government entities including public school districts to pay a ransom following a ransomware attack. Insurers will be focusing even more strongly on the targeted analysis and use of data. Marsh officials are optimistic the cyber insurance industry, as it matures, can level off. Ransomware and cyber-attacks on both supply chains and critical infrastructures pose a greater threat than ever to companies and society. Additionally, as ransomware events continue to garner headlines, organizations have made more deliberate efforts to steel themselves from the effects. Given the situation in Ukraine, discussions around war exclusions in cyber policies have taken on renewed importance. The latest incident at Marriott is relatively minor compared to major breaches in late 2018 and early 2020, but it signals a pattern of neglect. 1"The CrowdStrike 2022 Global Threat Report," PDF file. If they want cyber insurance coverage, they have to comply with minimum standards which are far more in-depth than before. "Munich Re Tightens Up Cyber Insurance Policies to Exclude War," International Business Times, April 8, 2022. 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. Insurers are concerned that sanctions imposed on Russia will lead to an increase in cyber-attacks emanating from the region. The cyber-attack was discovered in time, so the population of the town of Oldsmar, near Tampa, was ultimately not in danger. The number of claims in the first quarter of 2022 remains high, Marsh research shows. Market contraction, the Russian invasion of Ukraine and an uptick in nation state cyberthreat activity all contributed to an unbalanced market. The first quarter has seen wider adoption of restrictive policy language by some insurers in areas such as Common Vulnerabilities and Exposures (CVE) identified by the National Institute of Standards and Technology (NIST), systemic risk or aggregate risk, end of life (unsupported) software and a continued pullback in available limits often across all insuring agreements for any loss stemming from a ransomware attack. 2Hostetler, Baker, Theodore J. Kobus III et al. For example, ransomware programs can be rented on the dark web for US$ 40 a month. The sustainability of the cyber insurance market can be further improved with better resilience and innovative coverage of residual risks. "Optio MGA Ascent Withdraws from Cyber Market in Failed Binder Renewal," Insurance Insider, March 31, 2022. Cybersecurity Ventures forecasts that with further annual rate increases of 15% the loss will amount to roughly US$ 10.5tn in 2025. A June report from the U.S. Government Accountability Office questioned whether insurance, . 5Shi, Catrin. The results show a further increase in the potential for integrated solutions from insurers in the market. /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. The underwriting still needs to mature.. Critical vulnerabilities grew significantly in 2021, with an increase of approximately 20% (Tenable). On the heels of the most rapidly changing year for cyber insurance coverage to date, the first quarter of 2022 showed no signs of yielding that distinction to its predecessor. NY 10016, 2022 Panaseer Limited. Demand for cyber insurance has grown greatly in recent years. "Kaspersky Blacklisted by FCC alongside China Telecom and China Mobile," ZDNet, March 27, 2022. The risk transfer associated with services is an essential element of risk management for companies. The ransomware analytics and response firm Coveware recently stated that this new environment "could lead to an explosion in the volume of people that turn to ransomware as a means to support themselves. The threats are evolving constantly, he said. Most cyber insurance policies specifically exclude war but offer carvebacks for acts perpetrated electronically. The objective will be to refine risk profiles, anticipate and classify trends and learn from claims data. . 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. 6Miller, Susan. At the same time the vast majority of C-Level respondents confirm that adequate cyber security is still an issue within their companies. In view of current political conflicts, this trend is not expected to wane this year. CNA Financial alone paid a record sum of US$ 40m to members of the Phoenix hacker group. We see the insurance community playing a pivotal role in driving the improvement of information security defenses among both public and private sector organizations. All industry sectors are interested in cyber insurance. He testified, "It would be our opinion that if we ban ransom payments, now you are putting U.S. companies in a position to face yet another extortion, which is being blackmailed for paying the ransom and not sharing that with authorities. Ransomware claims typically trigger multiple insuring agreements in a cyber insurance policy beyond extortion, including business interruption, data restoration, forensics, legal and notification expenses, when the claim also involves unauthorized access to personally identifiable information. David has been actively involved in founding several industry alliances and expert groups across multiple regions. This is an encouraging sign, although we have thus far only seen these results in isolated circumstances and don't expect it to become a trend any time soon. Digitalisation is advancing in every area of the economy and society. We use cookies to ensure that we give you the best experience on our website. In January, we witnessed significant ransomware attacks on a community college and a large western county affecting operations well beyond mere computer networks. Following one such attack on Colonial Pipeline, fuel shortages and panic buying temporarily paralysed regional infrastructure on the US East Coast and made headlines worldwide. With an insurance coverage as dynamic as cyber, it is helpful to look at updates through several lenses: claims trends, market movement, regulatory landscape, geopolitical influence and coverage dynamics. In order to ensure the sustainability of cyber insurance, applicants must provide proof of their security standards. These clauses, substantially equivalent in terms of content, will be used in policies going forward to meet specific cyber risk requirements. As cyber threats continue to evolve, so too do underwriting techniques and the coverage grants found in cyber insurance policies. Insurers offer protection and thereby support the productivity and capabilities of insureds. Nik Whitfield founded Panaseer in 2014. While insurers do not closely scrutinize the adoption of specific technology, they want to understand how companies craft risk management strategies using existing technology and internal standards. Receiving less media attention was an attack in the US state of Florida in which a hacker attempted to tamper with the supply of chemicals at a water treatment plant and thus poison water supplies. The insurance industrys focus lies on clear wording, an adequate level of security and comprehensive transparency on risk information. [M] Munich Re / [P] Stanislaw Pytel / Getty Images. While insurers do not closely scrutinize the adoption of specific technology, they want to understand how companies craft. Finding the right combination of rate, underwriting discipline, retention and limits management will be required. 9"How the Russian/Ukraine War May Lead to an Explosion in Ransomware Attacks," Coveware blog, March 25, 2022. Munich Re experts assume that three factors in particular will characterise the threat landscape in 2022: ransomware, supply chain and critical infrastructures. "Top FBI Official Advises Congress Against Banning Ransomware Payments," The Hill, July 27, 2021. "7 These remarks were notable, particularly because the FBI's position has traditionally been to advise organizations to not pay a ransom. As underwriters gain more confidence in pricing cyber coverage following a period of adjustment, there is increased competition and interest from new entrants, increasing the likelihood of rate moderation,the report said. targeted attacks on particularly lucrative extortion targets like pipelines, is not the only risk and that attacks on smaller and medium-sized government service providers or companies are also possible. In 2021 alone, the Conti group of hackers the most lucrative service provider extorted or earned at least US$ 180m from victims (Chainalysis). Within the legislation is the Cyber Incident Reporting for Critical Infrastructure Act of 2022. Not only large corporations recognise the value of effective security management; medium-sized companies, organisations, cities, municipalities and hospitals are likely to continue to invest. Both incidents show that, big game hunting, i.e. 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. Here are 5 ways to help them. 2022 Cyber Insurance Market Trends Report thank you, 2022 Security Leaders Peer Report thank you, Continuous Controls Monitoring for Enterprise Security, Metric of the Month: On-demand panel discussion, Panaseers 2020 Financial Services Security Metrics Report thank you page, Panaseers 2020 GRC Peer Report thank you page, The CISOs guide to: Creating an effective ransomware board report Thank you, The Seven Sins of Security Metrics- thank you page, Webinar: Continuous Controls Monitoring What to measure, Webinar: The Time is Ripe for Proactive Security, Whitepaper: 451 Research Pathfinder Report The Time is Ripe for Proactive Security thank you page, Data Protection Statement GDPR Compliance, Briefing: Modern CISOs use Data to Improve Enterprise Cyber Hygiene and Reduce Risk, Forrester report: Misplaced confidence in security controls is putting organisations at risk thank you, The case for CCM: mergers and acquisitions thank you page. In view of increased vulnerabilities, it is crucial for companies and organisations to have a clear understanding of the threat landscape and ones own weaknesses. Some carriers have designed exclusionary wording broad enough to contemplate future events, in an "Insert new vulnerability here " fashion. Marsh clients filed more than 200 cyber claims in Q1, in line with the high number of quarterly claims across 2020 and 2021. Almost one-third of total Marsh cyber claims stem from healthcare, communications, media and technology companies. "Biden Administration Takes New Steps to Combat Ransomware Attacks," Forbes, September 21, 2021. The steep upward trend in premiums really started to take hold in the surplus lines market around mid-2021. Despite the high level of awareness of the cyber threat there is still a gap when it comes to actual insurance of the risk. That rate increase dropped to 107% in March and 90% in April. This was a trend also observed by Munich Re in the past year. Increasingly sophisticated threat actors and costly ransomware attacks are having the biggest impact on rising premiums. 7Miller, Maggie. At times, the cyber insurance market appeared headed toward a cliff, where the number of claims threatened to swallow the industry. He advises highly promising cybersecurity startups in the US and Europe. An increase to just over US$ 300bn is expected in 2022. Woolsack Way Security professionals are burned out. "2022 Data Security Incident Response Report," gated PDF, April 7, 2022. Reg in England and Wales with the company registration 09098199 Reg address: Ashcombe Court, Woolsack Way, Godalming, Surrey, GU7 1LQ UK, Terms & Conditions | Privacy Policy | Data Protection Statement | Unsubscribe. It reveals the factors driving increases in insurance premiums, what insurers look for when assessing risk, and how confident they are in the underwriting process. Nine out of 10 insurers believe its important for the industry to develop a consistent approach to analysing a customers cyber risk using accurate security metrics and measures. Experts predict that the increasingly agility and professionalism of cyber criminals will allow them to earn more than the global drugs trade. "Tracepoint Weekly Update," April 5, 2022. Industry experts further note that ransomware tactics continue to evolve beyond restricting access to data in exchange for payment. Sign up for our newsletter and be informed about new articles about your favourite topics. Member of the Munich Re Board of Management. Most cyberattacks come from ransomware, email compromise, Data breach costs spread downstream, IBM says, T-Mobile agrees to $500M settlement for 2021 cyberattack, Relentless vulnerabilities and patches induce cybersecurity burnout, Stave Off Cyber Attacks During Mergers With These Tips, How is Anonymous attacking Russia? GU7 1LQ, UK, Panaseer c/o WeWork, Our offering increases our insureds resilience and improves the protection of digital business models. With respect to the scope of cover under policies, respondents would like coverage to extend to data recovery services in an emergency, a 24-hour hotline, legal advice and forensic services. Together with our clients and partners, we will continue to successfully and sustainably shape the cyber insurance market. Risk transparency is essential for risk management by companies and organisations. The rate increases are still terrible, said Sridhar Manyem, director, research at AM Best. According to ENISA, the number of supply chain attacks quadrupled in 2021 compared with 2020. As the workforce transitions between work-from-home to in-office configurations, cyber criminals are taking advantage of the disruption in normal operating procedures, capitalizing on this hybrid/agile work environment to carry out their crimes. Meanwhile, cyber insurance rates are leveling out. The risk situation remains extremely dynamic. Interestingly, however, in stark contrast to the early signs that January showed us from mid-sized to larger organizations, RPS's small business sector of clients reported a 35% reduction in the frequency of ransomware-related events in Q1 2022. However, there is still a lot more to be done to achieve increased cybersecurity and progress has been slow up to now. Our experts continually refine our internal models on the basis of our own and third-party data, and with a particular focus on accumulation risks. And it is not only in Germany that the situation is tight to critical (BSI). FCC Commissioner Brendan Carr commented that the ban will "help secure our networks from threats posed by Chinese and Russian state-backed entities seeking to engage in espionage and otherwise harm America's interests.10 With this action, we are already seeing some insurers craft exclusions relative to potential exploits, causing insureds to scramble for replacement of their Endpoint Detection and Response solutions. On March 15, 2022, President Biden signed the 2022 Consolidated Appropriations Act into law. Vorndran argued that cybercriminals can already encrypt a company's network and demand payment, but also steal data from companies to use for additional blackmail if the attack is reported. Bryan A. Vorndran, assistant director of the FBI's Cyber Division, said in remarks before a U.S. House Judiciary Committee hearing that banning ransom payments could potentially create what is known as a "triple extortion" situation.

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