Rising Cyber-Insurance Claims Signal End to Brief Premium Decline in 2023
January 30, 2024
In 2023, the cyber-insurance landscape experienced a surge in claims, signaling a potential end to the brief decline in premium costs witnessed in the previous year, according to an article by Dark Reading.
The relationship between cyber-insurance premiums and the threat landscape is complex, with premiums historically lagging behind changes in the threat landscape. Notably, the industry experienced a spike in premium fees in late 2021 and early 2022 as cyberattacks surged. However, improvements in cybersecurity controls have contributed to a slowdown in rate increases, as more insured entities refrain from paying ransoms.
The origins of the chaotic cyber-insurance market can be traced back to the COVID-19 pandemic, which saw an increase in cyberattacks. The resulting surge in cyber-insurance claims led to a significant increase in pricing. The unforeseen shift to remote work and the cloud created an opportune environment for cyber attackers, breaking the traditional dynamics of the cyber-insurance market.
The cyber-insurance industry is expanding even with the challenges it faces. The direct written premiums value reached $5.1 billion in 2023, with a 62% year-over-year increase. Although the market stabilized temporarily in 2022, industry experts anticipate a return to the long-term trend with an increase in premiums and a more challenging environment for insurers. Large enterprises consider cyber insurance a necessary cost of doing business, while the underwriting for smaller companies remains an area of potential growth. Despite higher rates, the industry expects continued growth as cyber incidents continue to rise.
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