Cyber Insurance Market Trends
After significant increases in premiums in 2021 and 2022, the cyber insurance market has now stabilized despite a steady acceleration in the frequency and sophistication of attacks. This has led to competitive renewal expense for companies that can demonstrate improved cyber maturity and a simultaneous increase in costs amongst firms with recent cyber incidents or without demonstrated year-over-year improvements to IT security controls.
Based on a recent report from IBM, Financial Services remained the second most attacked sector behind manufacturing with roughly 20% of cyber incidents impacting this industry over the last five years. According to a survey of single-family offices by Dentons, a global law firm, a quarter of family offices surveyed reported a cyber attack in 2023, up from 17% in 2020. Half of respondents said they knew of another family office that suffered a cyber attack. Ransomware negotiator, Coveware, noted the percentage of companies paying a ransom demand has decreased over the past year. However, the dollar amount of ransomware being paid has increased significantly.
Surprisingly, many smaller financial institutions do not purchase cyber insurance. According to IBM, the average cost of a data breach was $4.45 million, meaning that firms should not only consider having cyber insurance but should determine the appropriate limits of coverage as well.
Navigating the Market
- Making the appropriate investments in cybersecurity and controls will have an impact on underwriting options and ultimately lower the rate.
- Companies using independent cybersecurity advisors like Drawbridge can benefit from improved controls and more favorable underwriting.
- Companies that have experienced a breach or loss may be declined coverage but could receive favorable treatment from underwriters if they have implemented appropriate controls and taken corrective action on vulnerabilities.
Premium
- After significant increases in cyber insurance rates in 2021 and 2022, Brown & Brown has seen premium rate decreases in 2023/2024 of between 10%-15% for mid-size financial services firms with mature cyber controls.
- Competition can still be aggressive on renewals for insureds with best-in-class controls.
- With increased coverage and services being offered, companies are encouraged to revisit carriers and investigate coverages. Price alone should not dictate placement decisions.
Limits
- While cyber insurance premiums have been decreasing over the last two years, hedge funds and Alternative Investment Managers have been increasing coverage limits.
- On average, hedge funds and Alternative Investment Managers who purchase cyber insurance purchase limits almost two times greater than non-financial services companies of similar revenue size.
- The average limits purchased ranged between $2 million to $3 million through 2021 but have increased on average from $3 million to $5 million through 2023.
- Largest increase in limits on average have been for hedge funds and Alternative Investment Managers that realize revenues of $50 million or more.
Coverage
- Risks and regulations have changed in the financial sector. Some carriers have made modifications to policy coverages to address these. Your policy should reflect expanded coverages and services.
- Carriers may offer increases in sublimited coverages and added enhancements.
- Financial services firms should focus high-risk areas and seek complementary coverages and sublimits. Financial institutions should focus particularly on fraudulent funds transfer sublimits, ransomware and reputational harm coverages and services in their cyber policy.
- Embedded services are important coverage elements for financial services entities with limited resources. Take advantage of additional offerings as carriers compete for business.
Capacity
- Carriers are offering expanded capacity in the U.S. and London, fostering competition on programs with quality controls.
- Some markets have increased their available lines, and there are new entrants to the cyber market.
Carriers are looking for companies who recognize and address cybersecurity seriously. Conduct a policy review and make sure that your efforts to secure your firm are properly reflected in your premium.
In collaboration with Drawbridge, Brown & Brown, a leading cyber insurance broker, is available to assist you in assessing your cyber insurance needs through the Cyber Insurance Affinity Program.
- If you are responsible for your firm’s cyber insurance program, follow the links to learn more and reach out to our team: CyberAffinityDB@bbrown.com.
- If you are not responsible for your firm’s cybersecurity insurance, forward this document to the appropriate person to make them aware of this offer.
If you are ready to apply for cyber insurance or get a competitive quote, use the following link: Brown & Brown Cyber Insurance Affinity Program.
