GRC Viewpoint

Cyber Insurance Trends Are Likely to Change in 2022 and Beyond

Faced with a costly scenario of an ever-increasing risk quotient, the cyber insurance arena has witnessed several obstacles in recent years, especially in the covid-hit years. As a direct impact, the insurance premiums showed an upward surge. In several instances, the surge in premiums was beyond the affordable range for several cybersecurity firms. As priorities changed and new challenges arose, insurance took a back seat, and several firms opted out of buying heavy-premium insurance. 


As many organizations need to have cyber insurance, a significant lack of it is undoubtedly a cause for concern. Moreover, as many enterprises decide against buying cyber insurance, the overall cyberspace industry witnesses a big crunch. 


The cyber insurance sector in the U.S has been highly volatile as far as 2021 is concerned owing to altering levels of damaging and dangerous cyber threats against the U.S based cyber security firms. 


Last year was crucial from a cyber security point of view. Ransomware attacks were abundant throughout 2021. The cyber security landscape was highly turbulent and buzzing with activities throughout the previous year. Cyber insurance experts are of the opinion that the current year will also have to deal with a similar scenario. 


The early days of 2021 saw the cyber insurance market getting a bit tense as several carriers increased rates, minimized coverage significantly, and imposed limitations on risk tolerance in several instances. 


Towards the end of 2021, ransomware failed to subside. Instead, incidents of ransomware attacks were on the rise. Consequently, underwriting requirements were subjected to significant alterations. Examples could be increased application of co-insurance provisions to share the risk between insureds. 


Also, insurance underwriters retained a particular focus on the overall cybersecurity measures of their insureds. As a result, the threat management measures adopted by an enterprise assumed more significance than ever. 


However, it is imperative to mention that despite the increase in cyber threats and the subsequent restrictions or altered ways of cyberspace, the cyber insurance sector also had few positive outcomes. For instance, on the one hand, the increased cyber-attacks turned cyber insurance more expensive. As a result, at least some companies were apprehensive of buying cyber insurance, which led to a significant halt in the cyber insurance space. However, on the other hand, the emergence of threats also led to enhanced awareness of cyber-attacks and how crucial cyber insurance can be. 


Going into the current year, cyber insurance experts advocate the need to ensure businesses across the cyber security industry have bought sufficient insurance so as to protect their overall exposure. In short, the chosen cyber insurance should be able to cover losses due to a specific cyber event. 

Besides, the present cyberspace industry is undergoing rapid changes. Therefore, the requirements concerning cyber insurance, say, underwriting, will be different from a few days ago. 


Cybersecurity controls implemented in a specific case would continue to be a prime factor in assessing and underwriting risks for 2022. Aspects such as deployed cybersecurity controls, maintenance, and adopted upgrade would be scrutinized. 

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