cyber insurance market 2022

Surrey The implementation of adequate cyber security requires increased investment. For the government in particular, its terrorism risk insurance may only kick in if an attack can be clearly defined as "terrorism.". Attackers often plan their attacks for the long term and maximise the impact by targeting supply chains and industrial or automated processes. 2Hostetler, Baker, Theodore J. Kobus III et al. The goal in a sustainable market is to establish solutions for cyber risks as a long-term insurance offering, increase insureds resilience and thereby promote the protection of digital economic models. 11Cohn, Carolyn, and Noor Zainab Hussain. Download our new report for insight into the trends shaping the cyber insurance market. On the heels of the most rapidly changing year for cyber insurance coverage to date, the first quarter of 2022 showed no signs of yielding that distinction to its predecessor. Cyber insurance is crucial for enterprise risk management, but its quickly becoming unaffordable. David has been actively involved in founding several industry alliances and expert groups across multiple regions. Munich Re supports government and private-sector initiatives to curb ransomware, such as the Ransomware Task Force (RTF) initiated by the US Institute for Security and Technology, and is also a member of the EU-wide No More Ransom initiative. Nine out of 10 insurers believe its important for the industry to develop a consistent approach to analysing a customers cyber risk using accurate security metrics and measures. 7Miller, Maggie. Together with our clients and partners, we will continue to successfully and sustainably shape the cyber insurance market. The crisis in Russia and Ukraine is already impacting underwriting in the cyber insurance community. Finding the right combination of rate, underwriting discipline, retention and limits management will be required. Here are 5 ways to help them. If they want cyber insurance coverage, they have to comply with minimum standards which are far more in-depth than before. New York, As we entered 2022, it appeared that the new year would not only rival, but perhaps surpass, the headlines generated in the previous 12 months. Not only large corporations recognise the value of effective security management; medium-sized companies, organisations, cities, municipalities and hospitals are likely to continue to invest. The loss ratios of 2021 have continued to put pressure on available capacity for cyber insurers, both domestically and abroad. We use cookies to ensure that we give you the best experience on our website. Insurers offer protection and thereby support the productivity and capabilities of insureds. For larger organizations, carriers are increasingly involving outside cybersecurity consultancy firms to bolster their expertise as they identify best-in-class risks and move away from those believed to present the greatest risk. The rate increases are still terrible, said Sridhar Manyem, director, research at AM Best. Ashcombe Court "Munich Re Tightens Up Cyber Insurance Policies to Exclude War," International Business Times, April 8, 2022. 10Kwann, Campbell. For example, the research shows a clear appetite for transforming how insurers assess an organisations security posture. 8"President Biden Signs into Law the Cyber Incident Reporting Act, Imposing Ransomware Requirements for Cyber Incidents and Ransomware Payments," National Law Review, Volume XII, Number 101, April 18, 2022. Others, however, are not as optimistic. using existing technology and internal standards. With respect to the scope of cover under policies, respondents would like coverage to extend to data recovery services in an emergency, a 24-hour hotline, legal advice and forensic services. The definition of insurability is key for the sustainability of the market, particularly as regards systemic risks and the extent to which these can be insured. The risk transfer associated with services is an essential element of risk management for companies. Some carriers have designed exclusionary wording broad enough to contemplate future events, in an "Insert new vulnerability here " fashion. ", It falls on companies to turn to security basics to try to keep cyber insurance rates in check. The European Union Agency for Cybersecurity (ENISA) recognised and analysed the increased risk from cyber-attacks on or via supply chains in its Threat Landscape for Supply Chain Attacks report. [M] Munich Re / [P] Stanislaw Pytel / Getty Images. Critical vulnerabilities grew significantly in 2021, with an increase of approximately 20% (Tenable). Woolsack Way Public awareness of digital vulnerabilities has heightened with the growth in number of serious attacks and losses. The latest incident at Marriott is relatively minor compared to major breaches in late 2018 and early 2020, but it signals a pattern of neglect. A June report from the U.S. Government Accountability Office questioned whether insurance, . the usage of cloud services of major providers, in its accumulation scenarios. In order to ensure the sustainability of cyber insurance, applicants must provide proof of their security standards. Meanwhile, cyber insurance rates are leveling out. We are in constant dialogue with our cedants and model providers regarding current cyber threats and accumulation scenarios to ensure that our approaches are state-of-the-art at all times. These exclusions must be worded transparently and unambiguously. Industry experts further note that ransomware tactics continue to evolve beyond restricting access to data in exchange for payment. The underwriting still needs to mature.. Threat actors are increasingly resorting to supply chain security attacks with the potential for widespread impact. Experts predict that the increasingly agility and professionalism of cyber criminals will allow them to earn more than the global drugs trade. Social engineering and wire fraud losses have moved to the forefront of claims frequency in Q1. We have also witnessed a move by many carriers to shortened timelines for quote. The isolation that Russia now faces has the potential to create a perfect safe haven for cyber criminals.9. The 2021 attack on Kaseya, a software service provider for remote monitoring solutions, resulted in malicious code with ransomware being distributed to approximately 1,500 clients. "Kaspersky Blacklisted by FCC alongside China Telecom and China Mobile," ZDNet, March 27, 2022. NY 10016, 2022 Panaseer Limited. It is important to look closely at the fine print as these terms and conditions continue to change. In January, we witnessed significant ransomware attacks on a community college and a large western county affecting operations well beyond mere computer networks. As a result, many insureds have yet to experience the first wave of sticker shock that is coming their way, while others are preparing for round two. Munich Re significantly contributes to a sustainable market, which is essential for our clients. These attacks disrupted the functionality of heating, cooling and ventilation systems, and lighting and security systems, including locking mechanisms and video surveillance in a corrections institution. The proportion of decision-makers surveyed who were still undecided about arranging cover remained unchanged at 35%. Rate increases have steadily dropped from the high reached in Dec. 2021 when businesses paid, on average, 133% more for cyber insurance year over year. In view of increased vulnerabilities, it is crucial for companies and organisations to have a clear understanding of the threat landscape and ones own weaknesses. The failure of cloud services or a multi-client data breach, for example, are covered. "Tracepoint Weekly Update," April 5, 2022. At times, the cyber insurance market appeared headed toward a cliff, where the number of claims threatened to swallow the industry. 5Shi, Catrin. Most cyberattacks come from ransomware, email compromise, Data breach costs spread downstream, IBM says, T-Mobile agrees to $500M settlement for 2021 cyberattack, Relentless vulnerabilities and patches induce cybersecurity burnout, Stave Off Cyber Attacks During Mergers With These Tips, How is Anonymous attacking Russia? Ransomware business reached a new peak last year and is attracting more and more criminals. 9"How the Russian/Ukraine War May Lead to an Explosion in Ransomware Attacks," Coveware blog, March 25, 2022. Nik Whitfield founded Panaseer in 2014. Exacting cybersecurity standards must be defined and complied with by insurers and exposed industry sectors alike. We see the insurance community playing a pivotal role in driving the improvement of information security defenses among both public and private sector organizations. Some theorize that the increased attention to the ransomware pandemic from the Biden administration3, and a heightened news focus, have led to at least a temporary slowdown in activity of this nature. As the sophistication and accuracy of outward-facing network scanning technologies continues to improve, some insurers are rewarding those risks showing best-in-class controls with flat, sometimes even slightly lower, premiums. 89% of insurers believe it would be valuable to have direct access to customer metrics and measures proving the status of their security controls. For the insurance industry, it is therefore vitally important to continue to tailor the range of cyber products to customer requirements and increasing digital dependencies. telecommunications or the power supply), as well as a possible cyber war, exceed the limits of insurability and are consequently excluded. As underwriters gain more confidence in pricing cyber coverage following a period of adjustment, there is increased competition and interest from new entrants, increasing the likelihood of rate moderation,the report said. Our approach in cyber insurance is unchanged: disciplined in underwriting and stringent in risk management. Making ransom demands is not the sole motivation of attackers of critical infrastructure. They share their insights into the cyber insurance industry, including how premiums increases are forcing organisations to consider other options. As underwriters gain more confidence in pricing cyber coverage following a period of adjustment, there is increased competition and interest from new entrants, increasing the likelihood of rate moderation,the report said. He advises highly promising cybersecurity startups in the US and Europe. In the analogue world, it took 15 years for the provision of safety belts in German cars to be made mandatory, and many more years for them to be accepted and fastened by users in every-day life. Given the situation in Ukraine, discussions around war exclusions in cyber policies have taken on renewed importance. Cybersecurity Ventures estimates global spending on cybersecurity in 2021 to have be US$ 262.4bn in 2021. Premiums are increasing rapidly and new research shows that 82% of insurers believe that prices will continue to rise for the next two years. In view of current political conflicts, this trend is not expected to wane this year. In 2021, threat actors claimed to have stolen data 82% of the time compared to 70% of the time in 2020.2. As we prepare for the onslaught of July 1 renewals, the greatest difficulties will be felt in the education and public sectors, as the number of insurers willing to entertain these sectors has dramatically constricted, both in the primary and excess markets. The ransomware analytics and response firm Coveware recently stated that this new environment "could lead to an explosion in the volume of people that turn to ransomware as a means to support themselves. The number of companies that already have cyber insurance increased by 20%. Within the legislation is the Cyber Incident Reporting for Critical Infrastructure Act of 2022. Insurers are concerned that sanctions imposed on Russia will lead to an increase in cyber-attacks emanating from the region. While insurers do not closely scrutinize the adoption of specific technology, they want to understand how companies craft risk management strategies using existing technology and internal standards. It falls on companies to turn to security basics to try to keep cyber insurance rates in check. The objective will be to refine risk profiles, anticipate and classify trends and learn from claims data. "Optio MGA Ascent Withdraws from Cyber Market in Failed Binder Renewal," Insurance Insider, March 31, 2022. 135 Madison Ave, While this market is certainly challenging, it also presents opportunities for more in-depth discussions, and the best agents can leverage this opportunity to show increased value as trusted advisors. Examples include the automotive cybersecurity standard ISO/SAE 21434, which will apply compulsory for all new cars from July 2022, and IEC standard 62443 on cybersecurity in industry and automation. Agents, brokers and insurers continue to navigate constant change in capacity, terms and conditions, and the threat landscape in an effort to keep cyber insurance a critical element of their insureds' risk management programs. 1"The CrowdStrike 2022 Global Threat Report," PDF file. Compared with the previous year, thesurvey shows that cyber insurance is becoming increasingly popular. /etc/designs/munichre/mrwebsites/topics-online/current/css/fix.aem-editor.css, Munich Re: Global Cyber Risk and Insurance Survey 2022, Cybersecurity Ventures: Global Cybersecurity Spending To Exceed $1.75 Trillion From 2021-2025, European Council / Council of the European Union: Cybersecurity: how the EU tackles cyber threats, Bundesamt fr Sicherheit in der Informationstechnik (BSI) Lagebericht 2021: Bedrohungslage angespannt bis kritisch, Cybersecurity & Infrastructure Security Agency: 2021 Trends Show Increased Globalized Threat of Ransomware, Tenable: 2021 Threat Landscape Retrospective, Lloyd's Market Association: Cyber War and Cyber Operation Exclusion Clauses, European Union Agency for Cybersecurity (enisa): Threat landscape for supply chain attacks. "Top FBI Official Advises Congress Against Banning Ransomware Payments," The Hill, July 27, 2021. The cyber-attack was discovered in time, so the population of the town of Oldsmar, near Tampa, was ultimately not in danger. But now,a surge in new buyers has begun to offset years of rising claims and higher premiums, according to data from global insurance firm Marsh. The number of claims in the first quarter of 2022 remains high, Marsh research shows. A Moscow-based cybersecurity firm with more than 400 million users worldwide was recently added to the FCC's list of restricted entities. The threats are evolving constantly, he said. A June report from the U.S. Government Accountability Office questioned whether insurance can cover cyberattack losses. Insurance companies can probably control their losses through limits, deductibles, reinsurance [and]so on, so they have strategies to control their financial losses, Manyem said. Marsh clients filed more than 200 cyber claims in Q1, in line with the high number of quarterly claims across 2020 and 2021. CNA Financial alone paid a record sum of US$ 40m to members of the Phoenix hacker group. targeted attacks on particularly lucrative extortion targets like pipelines, is not the only risk and that attacks on smaller and medium-sized government service providers or companies are also possible. In November of 2021, North Carolina became the first state to declare it illegal for state agencies and local government entities including public school districts to pay a ransom following a ransomware attack. Extortionists obtained ransoms averaging US$ 118,000 per successful attack (as compared to US$ 88,000 in 2020 according to Chainalysis). It is extremely difficult to manage all hardware and software components from multiple providers, each potentially with its own requirements or security standards and to adequately assess the resulting risk from or through the supply chain. As cyber threats continue to evolve, so too do underwriting techniques and the coverage grants found in cyber insurance policies. Ransomware claims typically trigger multiple insuring agreements in a cyber insurance policy beyond extortion, including business interruption, data restoration, forensics, legal and notification expenses, when the claim also involves unauthorized access to personally identifiable information. The first quarter has seen wider adoption of restrictive policy language by some insurers in areas such as Common Vulnerabilities and Exposures (CVE) identified by the National Institute of Standards and Technology (NIST), systemic risk or aggregate risk, end of life (unsupported) software and a continued pullback in available limits often across all insuring agreements for any loss stemming from a ransomware attack. Most cyber insurance policies specifically exclude war but offer carvebacks for acts perpetrated electronically. Godalming This is also evident from Munich Res global Cyber Risk and Insurance Survey 2022. It reveals whats driving the increase in premiums and how the market will evolve in response to growing threats such as ransomware. In collaboration with various industry participants and in consultation with Munich Re, the Lloyds Market Association (LMA) has published four standard clauses to exclude cyber war from coverage. With the increased use of new technologies and the continuous growth of digital dependencies, the prospect of new threat scenarios materialising in the future is a real one. This trend is concerning, because the level of technical understanding in the insurance community needs to increase if organizations are to be properly informed of the cause-and-effect impact of policy revisions such as these. Both incidents show that, big game hunting, i.e. Andreas Wuchner is a recognised cybersecurity and Risk expert with more than 25 years experience as a business owner, board advisor and investor operating within complex global business environments. Cybersecurity and incident response firm Tracepoint adds, "Business email compromise activity has remained consistent, especially as the deadline for personal tax filings in the US draws closer and given that a number of organizations are filing for extensions on the corporate tax deadline which passed on March 15th."4. Whats left to watch is how insurers will adapt to the increase. Vorndran argued that cybercriminals can already encrypt a company's network and demand payment, but also steal data from companies to use for additional blackmail if the attack is reported. Munich Re sees cyber premiums worldwide standing at US$ 9.2bn (beginning of 2022) and estimates that they will reach a value of approximately US$ 22bn by 2025. It isn't clear whether these remarks signal a change in posture (doubtful) or simply recognition that there are instances where, as a business decision, there is no other choice. More businesses understand the financial risks of a. A surge in new buyers has begun to offset years of rising claims and higher premiums, according to data from global insurance firm Marsh. The top six ways ranked, BlackCat ransomware claims attack on European gas pipeline, A Cyberattack Illuminates the Shaky State of Student Privacy, Threat actors shifting tactics as Microsoft blocks, unblocks and reblocks macros, Mandiant red team breaches OT servers to mimic crime group techniques, AWS wants to be an enterprise security strategy advisor, SEC's cybersecurity proposals: Why visibility into risk is at the heart of it. Munich Re expects these rules and regulations to be focused mainly to the issue of ransom payments and dealings with cryptocurrencies. According to ENISA, the number of supply chain attacks quadrupled in 2021 compared with 2020. Cybersecurity authorities in the USA, the UK and Australia are also seeing a worldwide increase in the threat to critical infrastructure. Global Cyber Risk and Insurance Survey 2022, More action required for higher cyber resilience, Up-to-date information - directly to your mailbox. Lastly, we believe the insurance community has played a pivotal role in moving the needle for organizations to take their information security defenses more seriously. Scenarios such as the failure of critical infrastructure (e.g. As the workforce transitions between work-from-home to in-office configurations, cyber criminals are taking advantage of the disruption in normal operating procedures, capitalizing on this hybrid/agile work environment to carry out their crimes. Digital attacks on energy providers, food providers, hospitals, administrative bodies and other areas of critical infrastructure reached a new peak last year. By signing up to receive our newsletter, you agree to our, What cyber insurance companies want from clients, Latest Marriott breach shows a human error pattern. Cyber product offerings reached significantly more decision-makers in 2022 than in the previous year (42% received an offer, compared with 34% in 2021). Both legislators and the insurance industry should strive increasingly on setting minimum standards for cyber resilience in companies in order to ensure sustainable improvements. The range of cyber products still needs to be made better publicised and the additional benefits of those products (i.e. Realistically, however, this will not be easy for all suppliers to fully implement, though common security standards, strict risk management in the supplier segment and good documentation of critical dependencies in the supply chain will help reduce the risks. Volatile er insurance business can only be written sustainably and reliably for clients under these conditions. 2022 Cyber Insurance Market Trends Report thank you, 2022 Security Leaders Peer Report thank you, Continuous Controls Monitoring for Enterprise Security, Metric of the Month: On-demand panel discussion, Panaseers 2020 Financial Services Security Metrics Report thank you page, Panaseers 2020 GRC Peer Report thank you page, The CISOs guide to: Creating an effective ransomware board report Thank you, The Seven Sins of Security Metrics- thank you page, Webinar: Continuous Controls Monitoring What to measure, Webinar: The Time is Ripe for Proactive Security, Whitepaper: 451 Research Pathfinder Report The Time is Ripe for Proactive Security thank you page, Data Protection Statement GDPR Compliance, Briefing: Modern CISOs use Data to Improve Enterprise Cyber Hygiene and Reduce Risk, Forrester report: Misplaced confidence in security controls is putting organisations at risk thank you, The case for CCM: mergers and acquisitions thank you page. Munich Re experts assume that three factors in particular will characterise the threat landscape in 2022: ransomware, supply chain and critical infrastructures. Alongside the findings from our research, it includes interviews with Andreas Wuchner and David Fairman, both experienced CISOs and board members.

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