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19 Oct 2022
Cyber Insurance Premiums Are Rising; Coverage Is Becoming More Restrictive, Posing a Big Risk for Businesses
The Insurance Information Institute (III) announced the release of new research, which shows that premiums on cyber insurance policies have risen significantly in recent years. The III's research reveals that the average policy premium increased more than 45 percent over the last few years.
One of the consequences of rising cyber security risks, such as data breaches, ransomware, and other malicious attacks, is increased cyber security insurance premiums. Unfortunately, given the current threat landscape, many organizations may be unable to afford this essential coverage.
Organizations can protect themselves against various risks associated with information security attacks, such as ransomware and data breaches, by purchasing cyber insurance. However, it is not uncommon for traditional commercial general liability policies not to cover these types of risks or not specifically define them.
Cyber-attack sophistication and the potential financial impact have made having cyber insurance coverage essential for many businesses. The increased security-related losses and the increasing demand for these policies have resulted in higher premiums.
Premiums for cyber insurance have risen 28% from the first quarter of last year to the fourth quarter of last year, according to the Council of Insurance Agents & Brokers, an association for commercial insurance and employee benefits intermediaries.
One of the primary drivers for the continuation of price increases has been a lower appetite for risk among carriers and higher demand for coverage. In addition, the increasing awareness among companies of the risks posed by cyber threats has driven up demand for cyber coverage.
To cut their losses from cyber claims, insurers are raising prices and becoming pickier with the qualifications of people to insure, demanding additional precautions like multi-factor authentication.
Dan Garcia-Diaz, the Managing Director of the United States Government Accounting Office, remarked that cyber insurance availability and affordability vary by industry and business size. "For example, small businesses may have more difficulty purchasing cyber insurance," he said.
Cyber insurance is becoming more expensive and restrictive because cyberattacks are rising, and businesses are not taking this risk as seriously as they should. For example, in 2021, more than 1 billion hacking incidents were reported worldwide, an increase of 20% from 2022.
This means that hackers are targeting companies at an alarming rate, leading to stolen data or destroyed systems. The good news is that your company may be eligible for cyber insurance coverage, but it will likely come with high premiums and strict terms.
While cyber insurance premiums are rising and coverage is becoming more restrictive, it remains an important coverage to have in any business plan. The best way to protect your business is to understand the liability and ensure you have the right level of protection for your company's needs.
Also read: Micro Focus and Google Cloud Partner Up to Strengthen Cybersecurity
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