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The Growing Concern of Cyber Insurance Claims

In a world increasingly dependent on digital platforms, cyber insurance claims have surged in significance. The initial half of 2023 saw these claims’ frequency leap by 12%. Meanwhile, their severity skyrocketed by 42%, leading to average losses exceeding $115,000. Accompanying this rise is a growing interest in cybersecurity insurance, particularly as businesses grapple with a myriad of online threats.

A Deeper Look into the Escalation of Cyber Insurance Claims in 2023

A prominent observation of 2023 is the ascending frequency and intensity of cyber insurance claims, chiefly stemming from ransomware, FTF, and BEC attacks. As Coalition’s 2023 Cyber Claims Report: Mid-year Update underscores, there’s a notable uptick in US claims and related incident data. Astoundingly, companies boasting revenues over $100 million endured the brunt of this trend. They reported a 20% rise in the volume of claims and suffered greater losses, evidenced by a 72% enhancement in claims severity when compared to the latter half of 2022.

The Evolving Terrain of Cybersecurity Insurance

Delving into the realm of cyber insurance claims, it’s evident that the landscape is morphing rapidly. As the onslaught of cyberattacks intensifies, the prerequisites and demand linked to coverage transform accordingly. Modern insurance policies are evolving – they’re diversifying, growing more detailed, becoming pricier, and introducing stricter eligibility criteria. Consequently, Chief Information Security Officers (CISOs) and their establishments face renewed obstacles and dilemmas as they mull over their cyber insurance ventures.

The Challenge of Procuring Cyber Insurance

A revelation from Delinea, a cybersecurity enterprise, last month spotlighted an intriguing trend: Acquiring cybersecurity insurance has become increasingly laborious for US-based entities. In fact, an expanding proportion of companies now need over six months for the same. This study underscored a widening chasm between insurers and businesses, the latter of which are scrambling for cost-effective, exhaustive coverage. Simultaneously, a multitude of firms consistently ramps up their investment in cybersecurity apparatuses to align with insurance policy stipulations.

Diving into the Main Drivers of Cyber Insurance Claims

2023’s first half bore witness to a marked 12% elevation in cyber insurance claims frequency, with the severity spiking by 42%. Major influencers behind this trend, as pinpointed by Coalition’s analysis, include FTF (31%), BEC (26%), and ransomware (19%) attacks. Notably, ransomware-related claims witnessed a 27% increase, peaking notably in May. The severity of such claims also touched unprecedented levels, averaging at a staggering $365,000, which is a 117% jump year-on-year. Adding to the concern, ransom demands soared, averaging $1.62 million in 1H 2023, marking a 74% hike from the previous year. Intriguingly, 36% of Coalition’s clientele chose to settle ransoms within this period.

FTF-related claim frequency, on the other hand, went up by 15% in 1H 2023, and their severity accentuated by 39%. BEC claims, however, presented a contrasting narrative. Their frequency slumped by 15%, with the severity receding by 7%, averaging a loss of merely $21,000, a historic low per Coalition’s records.

The Future Landscape of Cyber Insurance Claims

Understanding the intricacies of cyber insurance claims remains paramount for industries as we progressively veer towards a digital-centric world. With the dynamics around cybersecurity insurance being in constant flux, organizations need to stay ahead of the curve, ensuring both protection against cyber threats and a sustainable insurance strategy.

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