Cybersecurity insurance is quickly becoming necessary for large and small organizations dealing with sensitive data. According to Statista, 50% of U.S. organizations already have cyber insurance. With projections indicating substantial growth in the cyber insurance market, reaching an estimated $90.6 billion by 2033, it’s evident that this industry is on a trajectory of rapid expansion and transformation. Let’s explore some of the top trends in cyber insurance set to impact the industry in the near future.
Cyber insurance premiums tend to shift in response to changes in the overall threat landscape. With the volume of claims rising in 2023, premium costs are expected to follow suit in 2024. Citing various cybersecurity experts, Dark Reading and other industry insiders report that cyber incidents, the prevalence of cyber insurance, and associated premium costs will likely all rise in the coming years.
The COVID-19 pandemic marked a pivotal point in cybersecurity liability insurance and the market’s subsequent ebbs and flows. The sudden, massive shift to work-from-home practices relying on cloud services created ample opportunity for cybercriminals. As attacks and cyber insurance claims surged, so too did premium fees, which more than doubled year-over-year by the fourth quarter of 2021. Claims and costs subsided through 2022 and into 2023. However, the ensuing price plateau projects to be only a temporary respite. With ransomware- and privacy-related claims and other attacks rising, expect the cyber insurance industry and its premiums to rise during the next few years.
Insurers are placing greater emphasis on policyholders’ cybersecurity practices when underwriting policies. Businesses may be required to demonstrate that they have implemented basic cybersecurity measures, such as multi-factor authentication and regular data backups, to qualify for coverage or receive more favorable terms.
Artificial intelligence (AI) offers unprecedented opportunities for many companies but also enables significant new risks and exacerbates existing challenges to new heights. As AI tools and technologies become more widespread, malicious hackers and cybercriminals uncover new ways to utilize them to wreak havoc via massive malware attacks or more sophisticated phishing schemes.
AI may not necessarily introduce all-new types of cyber risks for insurers to factor into coverage possibilities. However, it certainly significantly impacts the risk an organization may face, enabling threat actors to work with increased speed and efficiency. At the same time, cybersecurity professionals continue to explore defense and monitoring possibilities for AI software to combat the evolving risks. As a result of this constant back-and-forth, AI will remain a trending topic for cyber insurers, who can also use AI to help analyze risks presented by prospective clients and customers.
As of 2023, a mandate from Lloyd’s of London—a major player in the global insurance marketplace—spurred many cyber insurance providers to revise coverage related to acts of war and nation-state-sponsored attacks.
Ongoing international conflicts increase the likelihood of foreign-government-based cyberattacks impacting the broader private sector beyond their intended targets. Lloyd’s syndicates, which can influence and sway the industry as a whole, must now exclude state-backed cyberattacks from basic policies covering damage due to cyber threats.
State-backed cyberattacks can cause massive economic damage. While cyber warfare exclusions aim to remove ambiguity about circumstances that policies cover, it’s often difficult to determine direct attribution for an attack back to an official state-sponsored source.
Cybersecurity insurance is still a relatively young industry subset, with risk-averse insurers lacking widely accepted standard terms and exclusion clauses. Organizations must diligently understand what types of cyber threats and events their policies cover.
The trajectory of cyber insurance is intertwined with broader digital transformation trends, reflecting a landscape marked by challenges and opportunities. Businesses can navigate these complexities by staying informed and agile. As we look to the future, the strategic integration of cyber insurance into broader risk management frameworks will be paramount for organizations seeking to thrive in the digital age.
Accessing expert guidance is indispensable. RAMPxchange is a pivotal resource, connecting businesses with highly rated and peer-reviewed providers. By tapping into this ecosystem, organizations can gain nuanced insights, compare offerings, and secure coverage that aligns with their specific risk profiles and industry requirements. Reach out to a RAMPxchange representative today to learn more and get started.