Obtaining cyber insurance coverage has been a difficult, time-consuming, and expensive endeavor for businesses across every sector in recent years. 2023 has been no different as premiums continue to rise, more complexity enters the mix, and more stringent requirements act as a barrier to gaining any coverage at all.
In contrast, cyber insurance was relatively easy to acquire for most of the last two decades — and could be added quickly. It was simple to add cyber insurance coverage to an existing policy, often broad in scope, and extremely affordable. But that has changed dramatically over the last three years. Due to many factors, the complexity of policies has sharply risen and the costs of landing new cyber insurance policies — or renewing them — have skyrocketed.
The cost of premiums soared in 2022 due to an increase in ransomware attacks and online commerce both drove demands for coverage. Reporting staked the premium increase as much as 50% from the start to the finish of 2022. In addition, premiums collected from policies written by insurers have tripled in the last three years. Rising rates have continued into 2023, with an 11% year-over-year increase on average in Q1 2023.
Clearly, many businesses need assistance in securing cyber insurance coverage. Let’s examine the causes of the increase, the resulting complications, and finally a possible solution.
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Why Cyber Insurance Coverage is Harder to Obtain
While the rise in ransomware is an overall reason for the hardening of the cyber insurance market, four driving factors related to that threat have spiked costs and increased the complexity of securing coverage.
Loss Environment — Due to more cyberattacks, and more insurance payouts, the increase in loss ratios has led to a corresponding deterioration of profits for insurance companies.
Systemic Risk Concerns — Now, insurers are more dialed into the risk that a single cyber event could affect many insureds, simultaneously. A single event could affect many connected policyholders.
Reinsurance — These costs are also increasing, thus adding to cyber insurance pricing. The demand for reinsurance capital remains greater than the available supply.
Available capital — The pool of capital available to clients from insurers is dwindling, meaning the total amount of a cyber premium that insurers are collecting is potentially insufficient to fund a catastrophic loss. Some insurers are exiting the cyber insurance market due to the concerns noted above. Meanwhile, others are reducing the amount of capital deployed on any given policy in order to limit their own portfolio’s exposure.
More Risk, More Paperwork
Cyber insurance has evolved more quickly than anticipated as a result, and that’s led to ripple effects for organizations looking to secure or renew current policies. Insurance providers now demand more specifications and clarification from their insureds on their deployment of cybersecurity, how they maintain such controls, and how they’re improving their overall cybersecurity health.
Policy documentation now requires booklets of questions as opposed to the simple checklist from a few years ago. Insurance providers are more concerned about potential risk than ever before. And with some exiting the market entirely, there are fewer providers to work with. The underwriting process is growing more and more rigorous, and the overall capacity has dropped.
Add it all up and it’s a tough formula. Despite taking steps to implement better security, many companies are now paying more — for less total coverage — than just a couple of years ago. It isn’t a rare case either, it’s simply the state of the cyber insurance market.
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Cyber Insurance Coverage Made Easy
Arnet Technologies has more than a decade of experience offering premier managed IT solutions, featuring a holistic approach that leaves nothing unaccounted for — including cyber insurance.
Now we’ve partnered with Arctic Wolf to offer the best in modern cybersecurity protection, including many of the tools and processes needed to secure cyber insurance coverage today. More than stronger risk mitigation, Arctic Wolf offers organizations a streamlined and affordable approach to securing cyber insurance coverage.
The Arctic Wolf Security Operations Warranty provides up to $1 million of financial assistance should the customer experience a covered security event.
In addition, Arctic Wolf Security Operations Warranty customers can also qualify for a fixed-price $1 million cyber insurance policy at exclusive discounts of up to or over 80%. Premiums in this program begin at $1,250/year, offering substantial savings on comparable policies. There is no individual underwriting and pre-approval is available.
With one step, businesses can acquire top-of-the-line cybersecurity tools, gain considerable warranty coverage and payouts in case of an event, and ensure cyber insurance coverage.
