Global insurance broker Marsh has identified that the cost of taking out cyber cover had doubled on average every year for the past three years, which has contributed to the sharp rise in premiums.
Backed by data from another broker, Honan Group, the 80 per cent rise in premiums in the past 12 months has been determined following a 20 per cent increase in the cost of cover in each of the previous two years.
According to Craig Claughton, a senior executive at Marsh, “cyber has become the new D&O”, referring to sharp rises in directors’ and officers’ insurance premiums since 2018.
According to The Australian Financial Review, Claughton and Honan chief executive Andrew Fluitsma who were hopeful premiums would ease, have now warned insurers would continue to demand companies prove they had strong security systems and policies in place before agreeing to sell them insurance.
“We are seeing signs of improvement, but like D&O, we are not at the end,” Claughton said.
There’ll be a number of insurance companies that won’t even look at a business that doesn’t have a bunch of security measures in place, Fluitsma added, warning that, “They’ll just turn around and say, ‘we’re not going to insure you’.”
The price rise is the result of an increase in the number and size of claims relating to ransomware, where criminals use malicious software to block access to an organisation’s computer system until a sum of money is paid.
Some insurers have also left the market, while remaining players attempted to recoup the cost of underpriced contracts written in previous years.