If 2022 wasn't already a wake-up call for companies trying to obtain cyber insurance, 2023 will be even more sobering. New technologies, advancements in AI and IoT, as well as growing cybersecurity threats, have continued to increase demand and insurance rates for cyber insurance.
According to sources, it's expected that the number of companies unable to afford cyber insurance or be denied coverage will double in 2023.
So, what are some of the key causes of the dramatic increases, and how should companies plan their upcoming budget based on the changing cyber insurance market?
To give you a better understanding of the current market and what it will look like by 2023, we’ve outlined key insights and developments to help you better prepare for insurance rate increases and what's to come in the upcoming year in the cyber insurance market.
The Current State of the Cyber Insurance Market
The Covid-19 pandemic forever changed the world – and the cyber insurance market. The monumental shift to remote work laid fertile ground for cybercriminals and emboldened them to commit more cyber crimes than ever seen before.
One of the most common cyber crimes and biggest current threats is ransomware attacks. According to, IBM's X-Force Threat Report 2022, these attacks account for 23% of cyber attacks and are by far the most costly. One of the biggest ransomware attacks in recent years was the WannaCry in 2017, affecting more than 250,000 people across 150 countries. The attack cost approximately $4 billion worldwide.
Because of the size, cost, and frequency of ransomware attacks, many insurance companies are now refusing to even cover them.
Other common cyber threats are:
- Supply chain attacks
- Cloud-based attacks
- Social engineering
- Mobile devices
- Poor post-attack practices
- Insider threats
Businesses are now more aware of these risks and are increasingly buying cyber insurance to protect themselves. But as the demand for cyber insurance grows, the prices of cyber insurance policies are also increasing.
Premiums have increased up to 20% in recent years, and according to a 2022 Panaseer survey, 82% of global insurers expect the rise in cyber insurance premiums to continue.
How The Industry Is Expected To Develop
In addition to increasing cyber insurance costs, one key development brokers and companies should be on the lookout for in the coming months and year are significant changes to cyber security risk assessment.
According to research, 87% of insurers said they wanted a more standard approach to analyzing cyber risks, and 89% want direct access to customer security metrics and measures. Meaning metrics and measures will play an increasingly significant role in insurers' decision to cover a company and at what rate.
Other likely developments and influencing factors in the cyber insurance market include:
- Economic trends: e.g. Inflation and the scarcity of cyber resources
- Geo-political events, e.g. the war between Russia and Ukraine and the risk of state-sponsored hackers.
- Privacy and government regulations: The cost of complying with various privacy regulations and security obligations
For brokers, another emerging development is the demand for specialization. Cyber threats are now commonplace, and in-depth knowledge of the cyber industry is in high demand, presenting an invaluable opportunity for agents and brokers.
What Businesses Can Do To Stay Protected
The cyber industry is constantly changing and evolving, and businesses need to do what they can to stay protected. There are a few things businesses can do to stay ahead of the curve and keep their cyber security up-to-date, cyber insurance costs low, and ensure they have a great security posture.
First, businesses should keep up with the latest industry news. This way, they can be aware of any new threats or vulnerabilities that might pop up. They should also make sure their cyber security software and systems are up-to-date. Keeping everything up-to-date will help businesses protect themselves from any new threats that might come their way.
Finally, all businesses should consider investing in cyber insurance. This type of insurance can help businesses cover the costs of any damages that might occur due to a cyber attack. It's important to choose an insurance policy so that businesses can stay afloat regardless of any market changes.
1Fort's all-in-one cyber solution offers broad cyber insurance coverage and security to keep your clients protected from current and future threats. We work with top carriers and provide full digital protection to provide your client's business peace of mind in the ever-changing cyber landscape.
Get in touch today for a free demo!