What’s Next for Cyber Liability Insurance in the New Year?

With hackers becoming savvier every day, it has been an ongoing challenge for businesses in nearly every industry to stay one step ahead of the next cyberattack. In response to the increase in claims activity and the severity of cyber-related losses, insurance carriers, as well as brokers and policyholders, will experience significant changes in cyber liability insurance policies. As an insurance agent, here is what you can expect going into 2022.

Premiums will increase. The frequency and severity of cyber-related claims have significantly impacted the cost of cyber liability insurance. According to a recent S&P report, experts predict that the cost for cyber insurance coverage will substantially increase over the next two years, and in some markets, current premiums may double.

COVID-19-driven risk exposures will continue to grow. Over the past 18 months, there has been no slowdown in the number of cyberattacks. This issue continues to be exacerbated by COVID-19 and the growing trend of more businesses allowing employees to work indefinitely from home or in a hybrid work situation. In fact, the cybersecurity market is expected to grow 6.2% each year until 2023, primarily due to COVID-19-related risk exposures.

Technology vulnerabilities will push insurers to make changes. The increased usage of existing and emerging online technology has resulted in insurers experiencing an uptick in requests from policyholders for higher policy limits and more inclusions in cyber liability insurance policies. S&P predicts that insurers are likely to react to coverage change requests and shifts in risk levels by restructuring cyber insurance offerings in the form of rate increases, more stringent cybersecurity and IT requirements, an adjustment of policy exclusions, and even a reduction in claims payout limits in relation to ransomware attacks.

Conclusion

While there have been and continue to be formidable changes regarding cyber liability insurance, S&P is seeing a stronger partnership being formed among insurers that could help strengthen coverage and provide greater balance sheet protection against frequent and high-severity cyber-related claim losses. In addition to claims, the report anticipates that these partnerships could help support the development of and access to expanded cyber-related services.

As we near the end of the year, now is an ideal time for insurance professionals to discuss cybersecurity risk management with their clients and carefully review their cyber insurance policies. It is also advisable to begin marketing cyber liability renewals as early as possible to secure the best coverage and pricing. 

About FastrackCE

Have you waited until the last minute to complete your continuing education credits? Don’t worry! At FastrackCE, we make it easy for insurance professionals like you to maintain current CE licensing requirements online and at your convenience. When you need us, we can help. For more information, call 800-544-3605, or visit us at fastrackce.com.

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