Dive Brief:
- Cyber insurance prices have dropped over the past 12 months amid growing competition in the market, according to a report published by Howden, a UK-based insurer.
- The research, unveiled Monday, shows a transition to double-digit rate reductions during the 2023-2024 period, following triple-digit rate increases in 2021-2022.
- “Pricing is now falling, and competitive forces are yielding more tailored underwriting decision-making that reflects companies’ risk profiles,” the report said.
Dive Insight:
Competition is now increasing as insurers look to “grow in a space that has huge potential and is relevant to businesses worldwide,” according to the study. Improved market conditions also reflect underwriting actions taken by carriers as well as ongoing investments made by businesses in strengthening their risk postures and claims management practices, it said.
The pricing relief comes even as cyberattacks are escalating and businesses are paying more to recover from them. The last 12 months have brought a resurgence of ransomware activity in particular, according to Howden.
“After a temporary lull in 2022 due to Russia’s invasion of Ukraine, ransomware activity has returned to historic high levels,” the report said.
With ransomware attacks, criminals use malicious software to prevent companies from accessing their own computer files, systems or networks, and they demand ransom payments to have such access restored. Such attacks can also involve threats to leak sensitive data to the public internet.
Recovery costs following a ransomware incident increased by 50% over the last year, reaching $2.73 million on average, according to a recent report from Sophos, a U.K.-based cybersecurity firm. That research found widespread use of cyber insurance among organizations looking to minimize the potential financial risks they might face in the event of a major breach.
But the study also revealed that most cyber insurance policies do not fully cover the costs of a breach after a claim is filed.
“With the average cost to remediate a ransomware attack now $2.73 million, organizations should ensure that their policy provides sufficient coverage should they experience a major incident,” the Sophos report said.
