Insurers are reevaluating their cyber coverage offerings after a surge in attacks has left some paying out three times in claims what they are collecting in premiums.
Some of the steps they are taking to “stop the bleeding” in this $3.15 billion industry are:
1) Dropping “at risk” sectors. We have had some clients in the legal, manufacturing and even MSPs report being dropped for cyber coverage due to these sectors showing an increase in claims.
2) Tightening cybersecurity standards. It is rare to have a commercial insurance renewal that is not being accompanied by a questionnaire to verify that cyber best practices are being followed.
3) Targeting potential customers. U.K. based Hiscox LTD said in a statement that they are focusing on smaller customers to reduce claims.
4) Increasing premiums. Clients are paying an average of 35% more in premiums in 2021, and many are receiving less coverage. We have had clients report closer to 50% increases on their renewals.
In the end, adjustments will be made to keep this line of business profitable. Organizations who want to maintain cyber coverage should be proactive in aligning to a recognized cyber framework to avoid being dropped or having their claims denied for failure to take “reasonable” precautions to protect data and maintain their network.