Cyber insurance prices are peaking, and so is the demand
Cyber insurance is raising its requirements and prices, with experts taking it as a positive sign.
According to a survey made by Databarracks, more than 40% of IT businesses in the UK reported an increased requirement from insurers over the last 12 months for cybersecurity tools. Under a third said that they’d experienced an increase in costs.
While the cyber insurance costs and requirements are increasing, the demand is not left behind. In the past 12 months, it increased from 51% to 57%. According to Databarracks, seven out of ten companies reported changes to their cyber insurance in the last 12 months.
More than half of those who experienced a cyberattack in the last 12 months made a claim on their cyber insurance, and the Banking and Finance sector has the highest number of claims compared to other industries.
“It is harder and more expensive for organizations to get cyber insurance cover,” said the Managing Director at Databarracks, James Watts. “The cost and conditions of cyber insurance began to rise in 2021 in response to an earlier ongoing cycle of cyberattacks and subsequent massive payouts.
Despite the rising prices, Watts remains optimistic, as the increased costs will lead to an overall improvement in cyber resilience. “For cyber insurance to remain viable, insurers needed to increase the cost to their customers – and reduce their likelihood of paying out,” he said.
According to Watts, it’s impossible to guarantee that an organization won’t suffer an attack. However, by using good cybersecurity practices, processes, and tools, robust measures in insurance policies can contribute to significantly reducing the risk.
“Cyber insurance is one of the few levers that can impact ransomware payments. For it to help raise the base level of preparedness, uptake needs to increase, too,” he explained.
Cyber insurance is often met with a bit of skepticism, as organizations think it may make them a target for ransomware gangs. It’s thought that having insurance might increase the likelihood of a payout on a ransomware attack.
However, Watts strongly recommends using cyber insurance, as it not only covers costs for an incident but also the forensic expertise to get the organization up and running again as quickly as possible.
“It is positive to see that despite the increase in cost and demand, the number of organizations with cyber insurance has also increased,” he concluded.