Attacks create a dark cyber insurance market: AM Best

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The outlook for the cyber insurance market is bleak and insurers urgently need to reassess all aspects of their cyber risks, AM Best Co. said in a report released Wednesday.

To remain a viable long-term partner in tackling cyber risks, the report says insurers must reassess their aspects, including their appetite, risk control, modeling, stress testing, and pricing.

The outlook for the cyber insurance market is bleak due to the rapid escalation of risks without adequate risk control, the report says; the growing sophistication of cybercriminals who exploit malware and cyber vulnerabilities faster than companies that may have been late in protecting; and the far-reaching consequences of cyber risk cascading and lack of geographic or commercial boundaries.

While the industry as a whole is well capitalized, “individual insurers who take cyber risk without a deep understanding of the market may find themselves in a vulnerable position,” the report says.

The report says the direct written premium for cyber insurance rose 22% in 2020 to $ 2.7 billion, reflecting both rates and demand growth.

According to the report, standalone policies account for about 60% of premiums, although packaged policies account for about 95% of existing policies.

Larger companies tend to purchase separate coverage, while SMBs may be satisfied with cyber coverage as part of the package, the report says.

The higher growth of autonomous policies “also indicates growing concern about cyber risks by organizations and their strategic choice to acquire policies solely to protect against cyber risks,” the report said.

Batch policies, which provide coverage through commercial policy approval, “continue to be the preferred way to go to market (small and medium enterprises) that do not have cyber risk analysis staff and prefer to consolidate their policies,” the statement said. Report.

The report found that premiums grew at a CAGR of 20%, well above commercial lines as a whole. The report states that the average increase in claims was 39.2%, which was mainly due to individual claims from top officials, mainly due to the frequency of ransomware attacks.

IN US Government Accounts Chamber Last month, a report said the availability and affordability of cyber insurance “remains uncertain.”

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