Why Cyber Insurance Premiums Are So High

Cyber insurance is changing fast, and the market has never been more competitive. While most organizations are covered by some form of cyber coverage already (and finding it to be adequate), many find themselves faced with an increasing bar for renewal as capacity shrinks – which leads them towards higher premiums over time.  The applications we’re seeing are growing ever more complicated and restrictive.

Why are premiums rising so quickly?

Long story short, premiums are on the rise because claims and payouts are on the rise.  According to canadianunderwriter.ca

In cyber liability, total net premiums earned for the second half of 2021 were $94.15 million – $12.15 million from Canadian insurers and $82 million from foreign insurers. But total net claims incurred (not including reinsurers’ share but including adjustment expenses) were $106.26 million ($97.4 million from foreign insurers and $8.86 million from Canadian insurers), for a loss ratio of nearly 113%.

Compound that with the fact that insurers have very limited visibility into their client’s infrastructure, and you end up with updated policy applications that are baffling for the average business owner.

What else are Insurers doing?

Lately underwriters have been hiring technical expertise to actually scan their client’s infrastructure.  It isn’t enough any more to say you have sufficient defenses, as the insurer is going to check with some fairly sophisticated digging.  If you’re mail records don’t show an SPF and DMARC entry, or your firewall has an open port for remote access, you may find you’re uninsurable. 

The bottom line

Find yourself a good broker and get your defenses in place.  If you’re not sure how well your infrastructure is protected, it’s time to investigate.  If and when you have a Ransomware event that you have to pay, you want that insurance to be there to back you up.

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