Cyber Insurance Trends 2019
Carl Niedbala
COO & Co-Founder
COO & Co-Founder
Worldwide cybercrime costs $600B USD each year. While the internet offers some of the greatest opportunities in business, it also gives rise to the greatest threats. According to the Allianz Risk Barometer 2019 study, cyber incidents and business interruption tied as the top business risks globally.
Data breaches have become a common occurrence with multiple high-profile cases:
In some cases, data breaches may be tied to malware. Verizon’s 2018 Data Breach Investigations Report identified ransomware as the most common type of malware accounting for 39% of malware attacks. After infecting a computer system and encrypting the files found there, these malicious programs hold the files hostage and demand a fee for their return. The 2017 WannaCry ransomware attack is one example.
Other cyberattacks exploit human weaknesses instead of computer weaknesses. Phishing attacks work by tricking people into clicking a link or providing information. Spear phishing attacks are similar but target the victim in a more personal and convincing manner.
In business email compromise attacks, criminals pose as legitimate partners to trick employees into sending wire transfers. In 2017, business email compromise attacks cost $675 million is adjusted losses, according to the FBI. The SEC has investigated “whether certain public issuers that were victims of cyber-related frauds may have violated the federal securities laws by failing to have a sufficient system of internal accounting controls.”
Think your company is safe? Don’t be so sure. Cyber risks can impact any business, regardless of size. According to the Insurance Information Institute, 55% of small and midsize businesses experienced a cyberattack in the previous year, and about half experienced a data breach.
All companies from small startups to global giants need to manage their cyber risks. However, only 14% of small companies consider their ability to mitigate cyber risks to be highly effective and small businesses are less likely than large ones to obtain cyber coverage.
Cyberattacks can also strike any type of company. However, certain industries have especially high risks. For example:
If a cyberattack hits your company, you could face numerous problems:
According to A.M. Best, the total number of cyber claims increased from 5,955 in 2016 to 9,017 in 2017. Cyberattacks are on the rise. As more and more businesses get hit with heavy losses, regulatory fines and expensive lawsuits, the need for robust cyber insurance is clear.
Cyber insurance pricing varies widely depending on a number of variables. Small businesses can expect to pay anywhere from $1,000 to $7,500 for an annual premium, according to FitSmallBusiness.
Underwriting for cyber insurance is complex and evolving. To understand the factors that impact premium costs, underwriters look at the potential risks.
Cyber insurance is a fast-growing market. Aon reports that the number of U.S. cyber insurers grew from 140 in 2016 to 170 in 2017, while direct written premiums went from $1.35 billion to $1.84 billion. According to A.M. Best, Chubb INA Group had $284.4 million in cyber direct premium in 2017, making it the top cyber insurer. The Hartford Insurance Group had the greatest number of cyber policies in force.
Here are the main takeaways you should pay attention to for 2019:
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