Though the coverage has been around for about a couple of decades, the risks are skyrocketing.
Cyber insurance isn’t new to business coverage offerings, but as data breaches, ransomware attacks and other risks rise, so are premiums, while availability is dropping.
The coverage is meant to help businesses overcome losses associated with these digital events.
Losses covered by cyber insurance can include everything from the cost of repairing the damage to systems and securing them, recovering lost business or disruptions, paying ransoms, rebuilding a reputation and even legal fees in the case of a lawsuit, but policies have been changing.
More companies are looking for this coverage, as it is becoming increasingly clear that virtually anyone can be affected by digital attacks, and it can involve a long and expensive recovery process. However, despite the rise in interest in this protection policy coverage, stability in premium rates and access to policies in the first place are all becoming growing issues.
Large-scale attacks – such as the Colonial Pipeline ransomware attack that made headlines last year and caused short-term gasoline shortage in the Southeastern United States – have made it clear to businesses that they are not safe, and the potential damage can be catastrophic. As a result, insurers are beginning to develop ways to limit their loss exposures.
Changing policies, altering availability and raising rates are top choices for cyber insurance companies.
Even with the increase in demand, the faster increase in risks had forced insurers offering this coverage to have to do what they can to ensure that their own exposures to loss remain within a manageable range. The market uncertainty has made it challenging for insurers to know precisely what risks and potential losses are faced in order to make it feasible to have this coverage available.
The cost of the coverage is based on the severity, frequency and cost of cyberattacks. Those have all been rising. With such an uncertain future, cyber insurance companies are frequently opting to be choosier about precisely who they will cover and what protection they will over. Moreover, that coverage isn’t as cheap as it once was, particularly in the case of high-risk organizations and industries, such as public sectors, healthcare and academic institutions.