Broker Check

Preparing for Changes in Cyber Insurance

January 18, 2022
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An analysis of the cyber market by the National Association of Insurance Commissioners, cited by Ariel Parness in CPO Magazine (https://www.cpomagazine.com/cyber-security-putting-skin-in-the-cyber-insurance-game/) shows that while cyber insurance premiums grew by almost 30% in 2020, loss ratios for many insurers were over 100%.

Faced with these results, the cyber insurance market is hardening. Premiums are up 73%, deductibles have increased, and policy language has been updated. Underwriters are looking at prospects' cybersecurity practices and whether they are increasingly resilient to attack.

Cyber insurance will help you recover from an incident, but it won't prevent an incident. Insurance should be part of a risk management approach.

To understand cyber risks and opportunities, Parness recommends

  • Understand the risk to your "crown jewels" and third parties.
  • Expect an event and anticipate scenarios.
  • Run simulations and exercises.
  • Be honest about your security capabilities.
  • Know what insurance you need and what is available in the market.