Cybersecurity Review Reveals Vulnerabilities, Advocates Comprehensive Methodology for Security Measures
In the ever-evolving digital landscape, cyber insurance has become a crucial safeguard for organisations against potential cyber threats. However, a recent analysis reveals a gap between the cyber coverage provided by brokers and that claimed by businesses, a phenomenon known as the Cyber Coverage Gap.
Brokers play a significant role in the cyber insurance market. A study shows that North America leads globally in this sector, with 73% of brokers offering cyber risk control tools and services compared to the global market's 68%. Interestingly, North American brokers are more likely to have a designated cyber practice (49%) than their global counterparts (43%).
Despite this, brokers are more likely to reject a client due to financial instability (23%), while carriers are more likely to reject potential insureds for missing security protocols (32%). Insurers may initially reject clients for cyber coverage due to inadequate security controls (26%), lack of financial stability (21%), or insufficient information (21%).
Once coverage is secured, claims are not uncommon. In the past year, 12% of clients with cyber insurance made claims, with ransomware accounting for 18% of those claims. However, coverage may be less than the total claim (19%), or the incident may fall below the client's self-insured retention (18%). Clients who make claims may find that their rate increases because of a claim (66%).
The incident may not have disclosed risk on the client's application (17%), or it may be deemed gross negligence. Clients may face increased scrutiny during the renewal process (56%). In some cases, clients are asked to implement additional controls as a condition of renewal (7%).
Seventy percent of insurance professionals expect the number of new cyber claims to increase due to growing threat activity. To mitigate damage and loss, insurers are proactive, with 71% of insurance brokers partnering with cybersecurity providers. The majority (69%) of insurers also offer in-house cyber risk control tools and services.
Prices for cyber insurance are on the rise, with 53% of insurers saying they have seen an overall increase in rates in the last 12 months. Despite this, 94% of insurers offer ongoing assistance or support to clients. Major North American insurers offering cyber risk management tools and services to a greater extent than global players include Munich Re, which leverages strategic partnerships with technology providers, cybersecurity experts, and government agencies to provide comprehensive cyber risk solutions and innovative products.
However, the report suggests that businesses may be unaware of the extent of their coverage or what specifically is needed. This gap between expectations and reality highlights the importance of clear communication between insurers and businesses to ensure that organisations are adequately protected in the face of cyber threats.
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