US cyberinsurance premiums jump 50% in 2022 as rising ransomware attacks and online trading drive demand for protection.
Ratings firm AM Best in a study released this week explained premiums collected from policies written by insurers reached US$7.2 billion in 2022 and have tripled in the last three years.
AM Best associate director, Fred Eslami, said that systematic risk is an ongoing problem. "In the end, the coverage provided to the insured can be determined by the risk appetite of the insurance company, and to a certain extent, the coverage that reinsurers are willing to provide," said Eslami, quoted on the insurance journal page, Saturday, June 17, 2023.
Ransomware attacks soared last year, driving demand for protection after the WFH (work from home) era sparked by the Covid-19 pandemic also made remote workers more vulnerable to digital attacks. The attacks also prompted companies and individuals to adopt stronger cybersecurity measures.
Loss ratios for standalone and package policies fell to 43% and 48%, said AM Best, in signs of industry life after incurred losses increased in 2020 and 2021. Surplus lines of insurance, which offset the unique risks exposed by conventional policies, also gaining popularity.
“Underwriting surplus is mostly new business and now makes up the majority of cyber insurance premiums,” reads the AM Best report.
AM Best Senior Industry Analyst Christopher Graham said that AI technologies and the rise of ransomware attacks in 2023 will ensure a steady flow of demand for cybersecurity insurance.
“With cyberspace evolving and becoming more complex with artificial intelligence creating new exposures and ransomware attacks returning to prominence in 2023, the demand for cyber coverage will continue to grow,” said Graham.