Cyber Insurance Rates Experience 10% Decrease in June
In June, cyber insurance rates saw a significant drop of approximately 10% compared to the previous year, marking a reversal from the sharp rate increases witnessed recently.
The decline in rates can be attributed to claims being smaller than anticipated, according to a report by broker Howden released on Wednesday.
Throughout 2021, cyber insurance rates more than doubled due to the impact of the COVID-19 pandemic, particularly driven by the surge in ransomware attacks. Ransomware works by encrypting victims' data, with hackers demanding cryptocurrency payments in exchange for providing a passcode to retrieve the encrypted data.
However, the number of global ransomware attacks decreased by 20% in 2022 compared to the previous year, primarily influenced by the conflict between Russia and Ukraine. Hackers from these countries redirected their focus towards military operations, resulting in a decline in ransomware attacks.
Insurers have also been emphasizing the need for clients to enhance their protection against cyber attacks, which has led to decreased risks and increased participation from underwriters. This shift in stance has reinvigorated the market, as there is now greater appetite for writing cyber insurance among industry players.
Shay Simkin, the global head of cyber at Howden, stated that "everybody is back with appetite for writing cyber insurance." The increased competition in the market has contributed to the decline in rates, as reported by Howden.
The cyber insurance market has witnessed substantial growth, with premiums totaling over $12 billion in 2022, compared to $10-11 billion in 2021. Howden predicts that the market will expand to approximately $50 billion by 2030, considering the scale of cyber crime.
Although ransomware attacks saw a 47% increase in the first quarter of the year compared to the same period last year, it is primarily driven by hackers seeking commercial gain. Simkin explained that ultimately, hackers aim to generate profits from their activities.
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