Cyber Insurance Costs Stabilise Amid Growing Threats

Share
Concept image of cyber cloud © Getty
Cyber Insurance has often been outpacing coverage as of late due to the growing threat landscape, but a Howden study highlights why this is changing

The cost of cyber insurance is showing signs of stabilising, a promising development for businesses dealing with digital threats, according to a recent report by insurance intermediary Howden. This market correction is a welcome relief after years of soaring premiums amid a global ransomware epidemic.

"Favourable dynamics have persisted into 2024,” says Sarah Neild, Howden's UK Head of Cyber Retail.

Robust cybersecurity measures bolster stability

Global instability, such as the Ukraine war and AI-driven cyber attacks, had created widespread concern about securing against threats. However, Sarah attributes this newfound stability to stronger cybersecurity measures across the private sector.

"At no other point has the market experienced the current mix of conditions: a heightened threat landscape combined with a stable insurance market underpinned by robust risk controls," Sarah explains. "The foundations for a mature cyber market, with innovation and exposure-led growth at its core, are now in place."

Cyber insurance and improved defences

This stability coincides with a recent survey by cybersecurity firm Sophos, highlighting the role of insurance in driving better preparedness. The study found that 76% of companies have enhanced their cybersecurity measures to qualify for cyber insurance. This trend shows that insurance providers are effectively incentivising better security practices across businesses.

Chester Wisniewski, Director and Global Field CTO at Sophos, cautions that while cyber insurance is beneficial, it is not a panacea. "A cyberattack can have profound impacts on a company from both an operational and reputational standpoint, and having cyber insurance doesn't change that," Chester warns.

Challenges and proactive measures

Despite positive trends, challenges remain. Howden reports an 18% increase in ransomware incidents compared to 2023. Notable breaches include a UK hospital shutting down, a US car dealership software provider halting operations, and a significant attack on a US healthcare provider resulting in a $22 million ransom payment.

However, the study shows fewer firms are paying ransoms, "due in large part to more effective risk controls." Additionally, 22% of Chief Information Security Officers (CISOs) report using Gen AI to hunt for new threats, demonstrating a proactive approach to cybersecurity.

Expanding the cyber insurance market

The report also points to an expanding cyber insurance market, now including small and medium-sized enterprises (SMEs), as a reason for stabilising costs. However, concerns about systemic cyber risks persist, particularly regarding breaches at popular third-party software providers used by smaller companies.

Equally, while costs have stabilised, the Sophos survey highlights a potential misalignment between insurance coverage and actual recovery costs. Only 1% of respondents who made a claim reported that their insurance covered 100% of the costs incurred during remediation.

Despite these challenges, the stabilisation of cyber insurance costs and the increased focus on cybersecurity represent positive steps towards a more resilient digital ecosystem. As businesses continue to invest in their defences, both to qualify for insurance and to protect themselves, cybercriminals may find themselves increasingly disadvantaged.

************** 

Make sure you check out the latest industry news and insights at InsurTech Digital and also sign up to our global conference series - FinTech LIVE 2024

**************

Share

Featured Articles

People Moves: Alexandra Cliff

InsurTech Digital runs through the latest movers and shakers from the insurance and insurtech industries…

How CFO Amy Hood Drives Microsoft’s AI and Cloud Success

Microsoft CFO Amy Hood’s partnership with visionary CEO Satya Nadella makes her crucial to transforming Microsoft into a multi-trillion dollar powerhouse

Cyber Insurance Market Matures Amid Security Demands

Arctic Wolf research shows the European cyber insurance market maturing, as organisations weigh security demands against comprehensive coverage benefits

SecurityScorecard on Cyber Risks in Insurance Supply Chains

Digital Strategy

Advania Asks: Can the Lloyd’s Market Use Tech to Evolve?

Technology & AI

Qantev and INSTANDA Partner to Drive Digital Transformation

Technology & AI