Many people understand the need for auto insurance and health insurance, but the popularity of cyber insurance is up and coming. Computer hackers have been around as long as computers themselves. The relationship continues through time. As computers get smarter so do their hackers. Thus, the need for cyber insurance is increasingly more important.
One of the most pressing issues of cyber insurance is ransomware. In the past five years, ransom demands have increased 25 times. Ransome demands recently crossed the $50 million threshold in 2020. The increasing ransom demand has increased because cyber-attackers are increasingly strategic and opportunistic. They have come to realize that has they go after large businesses and organizations they can demand seven figures.
What does this mean for insurance? As cyber-attacks have increased so have the cyber insurance premiums. Between 2020 and 2021 the average cyber insurance premium has increased by over 35%. Many people may see the price hike as an extreme measure, but in reality, cyber insurance has been underpriced for far too long. Through 2021 there will be a cap on supply in the cyber insurance market. There is however a long-term goal to raise awareness to help the insured improve their cybersecurity. It is important for risk management vendors to help achieve the best possible outcomes and to get on the proactive side as opposed to the reactive side. Protection is possible through cyber insurance.
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