The COVID-19 pandemic has transformed the way we live and work as we continue to rely more on technology than ever before. As a consequence, ransomware attacks and data breaches make headlines practically every week. In order to avoid the financial ramifications of improper cybersecurity, organizations need to incorporate cyber risk management strategies efficiently. As the decade goes on, it’s becoming increasingly clear that cyberthreats will continue to be one of the largest risks for business.
Cyber insurance is for organizations in the same way life insurance is for people. When considering the potential financial impact of a cyberattack, cyber insurance is the best way to address cyber risks, and thereby protect organizations from the aftermath of cyberattacks. Although taking out a cyber insurance policy mitigates the financial risks for an organization, that risk doesn’t disappear—it transfers to the insurers.
The increasing trend of cyber insurance premiums and claims
With the increased sophistication and frequency of cyber crimes, cyber insurers are seizing the opportunity. They are raising premiums and limiting payouts for businesses that fall victim. Cyber premiums in the U.S. and Canada increased 29% month-over-month in January 2021, and 32% in February 2021, according to Insurance Journal.
The frequency of claims rose by 31% in the first half of 2021 from the second half of 2020. Overall claims severity increased 28%, to an average loss of $197,000 per claim submitted to Coalition, the world’s first Active Insurance company designed to prevent digital risk. Coalition also indicated that its claims severity in Canada increased four times over from 2020 to the first half of 2021. In the latter half of 2021, Coalition’s ransom demand made against their policyholders increased 20% and the claims severity increased 10%.
Reduce risks and cyber insurance premiums
If you want to mitigate security risks without raising insurance premiums, then you need to implement certain security controls within your organization’s IT infrastructure. Our free e-book on cyber insurance will help you learn the critical security settings required to protect your organization against risks and reduce insurance premiums.
