Cyber insurers must contend with the growing demand for cybersecurity and how it is becoming more essential daily. With cyberattacks on the rise, there’s been a considerable increase in the demand for cybersecurity insurance policies. Alongside this increased demand is a growing fear that some companies offering these policies may soon pull out of the market. There is this fear that the cost of security breaches will outpace insurers’ ability to cover exposures.
While this is undoubtedly a risk, recent research reveals that only 16% of surveyed insurers would exit the market due to the current rate of cyberattacks. Still, insurers and insureds should be aware of the following factors impacting the cyber insurance market.
Although most insurers plan to remain in the market, many realize they cannot do so at their current rates. As a result, premiums for cybersecurity insurance policies are rising across the board. It is proving challenging for insureds, who may not be able to retain coverage with recently raised premiums. It has led some companies to cancel their coverage — leaving them vulnerable to losses — or seek alternatives for protection.
One alternative that’s become increasingly popular in the wake of rising premiums is the trend toward self-insurance. It refers to setting aside a large sum of cash to shield against cybersecurity-related losses. Although this strategy is better than none, it’s difficult to predict the scope and cost of a potential attack, meaning that a company’s reserves would likely be insufficient. It is especially true given the fact that the average cost of a data breach is at an all-time high of $4.35 million.
Many problems have brought on the rising costs of premiums, but the most significant contributing factor is the recent increase in ransomware attacks. Unfortunately, this problem worsens as the technology and expertise of cybercriminals surpass the defensive resources that many organizations have. The expansion has compromised many significant companies, and public organizations such as schools and hospitals have become targets, too. These attacks are typically motivated by the pursuit of financial gain, but some are conducted seemingly solely for the sake of malice.
These phenomena have led to a clear need for more extraordinary prevention strategies in the cybersecurity arena. Companies must train staff on basic principles of cyber safety, and organizations must invest in resources such as Portal Pro to mitigate the continual risk of cyberattacks. What is Portal Pro? Portal Pro is an intuitive insurance platform that connects insurers and insureds via the Verity database. With a secure custom insurance portal, insurers can enjoy peace of mind and strengthened client relationships.
Say goodbye to outdated systems and begin looking at a solution that will provide what you need to increase productivity, decrease costs in the long run, deliver frictionless transactions, and remain competitive in today’s environment. For more information about VRC’s Verity software and to book a demo, click here or contact us at (541) 209-0700.
