Most cyber insurance buyers have been hit by complex and time-consuming renewals and many buyers have been left with ‘less coverage at a higher cost’ in the first half of 2021 according to insurance broker Arthur J Gallagher (Gallagher).
Gallagher in its first-half review of 2021 of the cyber insurance market said buyers faced significant limits on capacity, narrower terms and much higher rates.
The review report said the rise in attacks was not a localised trend; it was felt around the globe. According to one report Europe, the Middle East and Africa experienced a 36% increase in cyber attacks, the US followed with an increase of 17%, while those in the Asia-Pacific region saw a 13% increase since the beginning of the year.
Notably, hackers continued to focus on targets in the supply chain, where a successful attack on one could impact thousands of other victims.
The report said underwriters have turned ‘a laser focus’ on data security controls when looking at renewal risks, with ‘even greater underwriting scrutiny’ of cyber security controls expected for the remainder of 2021.
The report said buyers without preventative controls, such as multifactor authentication, remote desktop protocol or segregation of networks and encryption, will be met with carriers ‘refusing to quote’ or will see rates hiked by between 100% and 200%, but in some cases as high as 300%.
“Even the best-in-class risks that comply with all underwriting required security controls, are seeing increases in the 40% to 60% range,” the report said.
Risk appetite has waned for some sectors altogether with municipalities, education and manufacturing particularly squeezed.
Capacity is expected to shrink across the cyber insurance market during the second half of 2021 and rates will be driven further upwards by higher reinsurance costs for carriers. M