AM Best took a hard look at cyber insurance premiums in the United States in 2022. The results should be frightening to businesses and individuals. Cyber premium prices jumped 50%.
Premiums hit $7.2 billion. That’s triple 2019’s figures.
Fred Eslami of AM Best said ransomware attacks and online commerce are driving the demand for cyber insurance. “Systematic risk is an ongoing concern,” Eslami said. “Ultimately, the coverage provided to insureds may be decided by the risk appetite of the insurer, and to a certain extent, the coverage that reinsurers are willing to provide.”
AM Best said workers doing their jobs from home made them more vulnerable to ransomware attacks than they would have been in the more protected atmosphere of the office. Though companies and the individuals working from home offices eventually adopted more, and better cybersecurity measures, it was too little too late.
Loss ratios for standalone policies hit 43%. For packaged policies the number is 48%. Those losses caused insurers to be more picky about placing policies and that drove those needing more detailed, and difficult to cover, cyber insurance to surplus lines insurers.
The Best report says surplus lines can cover the unique risks that cannot be covered in a conventional policy. “Surplus lines writers grabbed the bulk of the new business and now account for a majority of cyber insurance premium,” AM Best’s report said.
Christopher Graham is a senior industry analyst for AM Best. He said AI technology and a huge increase in ransomware attacks will drive demand in 2023.
“With the cyber universe expanding and becoming more complex with artificial intelligence creating new exposures and ransomware attacks returning to prominence in 2023, the demand for cyber coverage will only increase” Graham said.
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