In the post-COVID-19 era, the market for cybersecurity insurance is anticipated to grow from US$ 11.9 billion in 2022 to US$ 29.2 billion by 2027, at a CAGR of 19.6%.
Cyber insurance will be bought by more SMBs than ever. Industry research found that only 15% of SMBs had purchased some form of cyber insurance, even though cybercrime was one of their top concerns. This means that for the foreseeable future, cyber insurance represents the single biggest growth opportunity for carriers, brokers, and MGAs.
According to a recent survey by Inc.com, which found that there are more than 30 million small top midscale businesses in the US alone, 77% of these companies believe that adopting technology throughout their company is a key factor in their growth.
Cyber insurance will be a part of every organization that depends on digital technology currently or in the future.
Here are four outlooks for cybersecurity in 2023:
1. Insurance companies will factor in a company’s existing (or non-existing) cyber security measures.
For carriers and policyholders that lack an active risk management system for these risks, the cost of mitigating and insuring data breaches and other cyber catastrophes will keep rising. For small and medium-sized firms, a cyber event often costs insurance more than US$150,000.
The average cost of a cyber incident for large businesses is around US$10 million. Carriers will demand more security from businesses to buy insurance to reduce those expenses and keep a successful book of business.
We predict that, at the very least, policies with limits of more than $500,000 will need to have anti-virus, firewall, two-factor authentication, backup, and encryption.
2. Companies that’ve already experienced data breaches will have a harder time finding a cyber insurance provider.
According to a recent report by the Government Accountability Office (gao.gov), the increasing threat of a cyber breach will drive an upsurge in cyber insurance premiums while reducing availability.
In 2020, 47% more buyers chose cyber coverage, up from 26% in 2016. The cost of cyberattacks roughly doubled for American insurance companies between 2016 and 2019. And as a result, there was a significant rise in insurance prices. Due to the current shortage of insurance capacity in the market and the fact that many firms are unable to obtain cyber insurance at an acceptable price, costs are likely to increase.
3. Costs are projected to rise as a result of the market’s existing lack of insurance capacity and the fact that many businesses cannot find cyber insurance at a competitive price.
Brokerages must now be ready to discuss a packaged approach: a pre-placement cyber risk report, a competitive cyber insurance policy, and a platform that continuously monitors exposures throughout the policy’s lifetime and notifies the insured before a breach occurs. This will help clients avoid a price spike following a breach and a claim.
This strategy may lessen the need for some coverage restrictions or exclusions while preventing premium increases.
4. The adoption of AI-powered automated underwriting for cyber policies will keep expanding.
Providers can help their clients in getting the coverage they require, lower the chance of a breach, and prevent premium increases when carriers and MGAs use tested automated underwriting supported by tested technology. In order to provide the SMB market sector with a cyber insurance policy, automated data-driven solutions are essential.
If your business needs help finding the right cyber insurance, get in touch with us at Village Insurance Direct.