The ransomware epidemic is a major concern today. That is true, especially to the cyber insures. Cases of ransom demand have increased from $15,000 to $175,000 in the last five years. According to the NetDiligence 2021 report, this is a more than twelve-fold increase.
But that is not all; ransom demands have increased over the last three years. It surpassed the $1 million minimum in 2018 and $3 million in 2019. The case even worsened in 2020 when it passed the $50 million thresholds.
Hackers are reportedly getting more opportunistic with their threats. Unlike in the past, they are making more seven-figure demands. And this has a significant effect on the cyber insurance limits. It is also forcing carriers and the insured to leverage out-of-pocket options. The 2020 peak has even forced the insurance market to take additional steps for the best.
The Result of Ransomware Epidemic to Insurers
Today, with the increased ransomware epidemic, insurers are reacting differently. But, Ari Griller notices some commonalities in the whole endeavor. One of the issues that most insureds realize is that the prices for cyber insurance have increased. Ari Griller agrees that the pricing from 2020 to 2021 increased between 35-40%.
Many factors are responsible for this hike in rates. But the severity and frequency of ransomware are largely to blame. Griller also noticed a significant difference today in cyber insurance market price. Yet, this still comes as a surprise to many. They say the product line has been affordable even during such exposure in the past.
Far from premium hikes, some providers are sub-limiting ransomware and related cases. This means the policyholders will only claim a fixed amount for any case of cyberattacks. Not only that, but this will also include costs for forensic, legal, and other threats. Also, some providers are opting for insurance provisions to force risk sharing.
Griller connotes that the underwriting process has changed. Today, the process is more intensive on the verification of ransomware and the client’s unique situation. With the ransomware epidemic soaring, the carriers are also managing their limits. Many are times when the carriers reduced their capacity to offer compensation.
Long-Term Solutions for The Ransomware Epidemic
Griller says dealing with the ransomware epidemic requires long-term solutions. He agrees with the need for a rate increase and more intensive underwriting. But he says all these are short-term solutions. On his end, he claims raising awareness of ransomware is one of the long-term solutions. In addition, helping the insureds to bolster their cybersecurity stand is also an excellent consideration.
The Tokio Marine HCC-Cyber & Professional Lines Group Vice President emphasizes partnership. That is between the insured and the carrier to ensure long-term solutions. However, he is concerned about how people only see the carriers only as risk transfer agents. That is why he recommends the need for the carriers to be part of their insureds’ risk management plans.
Tokio Marine HCC-Cyber & Professional Lines Groups are committed to working with other stakeholders. And that is much like a recent partnership they did in October 2020. The company, together with CrowdStrike, announced a plan to offer cloud-delivered endpoint protection. This will allow the insureds to address the increasing ransomware epidemic.
The group is also partnering with OneIT to provide clients multi-factor authentication. They make this possible with their Cisco’s Duo and a secure offsite backup and recovery. All these solutions they deliver to the insureds at reduced costs. Alongside their preventive solutions, they help the insured improve their existing security methods. And as the say goes, prevention is the best cure; the agency is committed to ensuring that.
It may be the last thing the insureds want to hear, but cyber insurance pricing will not reduce soon. So, now when ransomware attacks are on the rise, the providers will use this to hike prices. But as Griller opined, having long-term solutions is the only way to go. Added to the preventive measures, he hopes, the threats will be easier to handle.