The sudden shift to remote work due to COVID-19 gave cybercriminals new opportunities, accelerating the frequency and severity of cyber attacks to historical heights. Cyber criminals also continue to evolve in their tactics and targets, attacking both organizations rich with confidential information and vendors farther up the supply chain. Insurance companies have responded with increased scrutiny and higher insurance premiums.
Coalition, a cyber insurance provider, shows the most frequent types of losses in its H1 2020 Cyber Insurance Claims Report:
These losses account for 87% of reported cyber incidents and 84% of claims payouts in the first half of 2020. The frequency of ransomware attacks increased by 260% in 2020, compared to 2019, according to the ThreatLabZ 2020 State of Encrypted Attacks report, and the average ransom demand increased 47% between Q1 and Q2 of 2020, as noted by Coalition. As instances of network intrusions and ransomware events increase and escalate, cyber insurance rates continue to show trends of hardening.
Insurance companies, challenged to balance increased extortion demands against profitability and market dynamics, have been tightening underwriter scrutiny for new applicants and existing insureds, examining information security controls, policies and protocols and overall cybersecurity posture. Insurance companies are also increasingly focused on the supply chain, utilizing third-party vendors to assess policyholders’ external networked environments to help inform scope of coverage and premiums. Businesses over $1 billion in revenue and those in “challenging classes” (such as retail, hospitality, healthcare and financial institutions) have been particularly impacted, seeing premium increases over 20%, according to USI's 2020 Q4 Commercial Property & Casualty Market Outlook.
As the remote work trend continues into 2021 and cyber losses increase in frequency and severity, risk management strategies and cyber insurance will be critical pieces for protecting your organization. Contact your USI Insurance Services consultant to discuss your exposure to cyber risk and pursue the appropriate solutions for your organization.
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