January 18, 2024 at 12:04PM
The cyber-insurance market is expected to see rising claim volumes due to increasing threat activities, potentially leading to higher premiums in the next 12 to 24 months. Despite recent declines in average prices, industry experts anticipate a shift towards increased costs as the threat landscape evolves. While costs temporarily eased in 2022, a surge in ransomware and privacy claims in 2023 may signal forthcoming price hikes. Despite market disruptions amid the pandemic, the cyber-insurance industry continues to expand, with insurers adjusting policies and striving to meet growing demand. Despite current pricing stabilization, the industry sees continued growth due to the increasing prevalence of cyber incidents.
Based on the meeting notes, the cyber-insurance industry is experiencing significant changes due to the evolving threat landscape and the impact of the pandemic. After a period of declining premium costs, there is now an expectation that cyber-insurance premiums will rise in the next 12 to 24 months, driven by a surge in ransomware- and privacy-related claims.
It is noted that improvements in cybersecurity controls have led to a higher proportion of insureds not paying ransoms, which has influenced the decline in premium fees. Despite this, the overall trend suggests that pricing is likely to stabilize and increase in the coming years.
The industry has seen the value of direct written premiums grow significantly, reaching $5.1 billion in 2023, marking a 62% increase year-over-year. This growth indicates that cyber-insurance remains an essential component of risk management for businesses, particularly as the value of cyber-incidents continues to rise.
Overall, while the industry experienced a temporary respite in 2022, it is expected that cyber-insurance costs will continue to trend upward, leading to a stabilization of prices in 2024. This emphasizes the increasing importance of cyber insurance for both large enterprises and smaller companies, with a focus on the potential growth in cyber-insurance underwriting for the latter.
It is clear that the cyber-insurance industry is in a state of transition and growth, with a need for businesses to adapt to the changing risk landscape and invest in comprehensive cyber insurance coverage to mitigate potential financial losses from cyber incidents.