Cybersecurity Report Reveals Vulnerabilities, Proposes Comprehensive Strategy for Safeguarding Systems
In the ever-evolving landscape of cybersecurity, the role of cyber insurance has become increasingly significant. A recent report by Arctic Wolf sheds light on the current state of the cyber insurance market, particularly in North America.
The report reveals that while only 45% of organizations in North America have the necessary cyber coverage, the region is leading the global market. North American brokers are more likely to offer both cyber risk control tools and services, with 73% doing so compared to the global market's 68%.
One of the key findings is the increase in cyber insurance rates. Over the past 12 months, 53% of insurers have reported an overall increase in rates. This trend could represent an opportunity for brokers to reassess clients' needs and make recommendations for additional protection and mitigation.
Ransomware attacks have been a significant concern, accounting for 18% of the claims made by insureds in the past year. Other common claims included data breaches, theft of funds, and phishing incidents, including business email compromise.
However, not all claims are successful. Twenty-five percent of claim rejections occur because the incident was deemed gross negligence, while another 25% occur because the incident falls outside the terms of the policy. Additionally, 18% of rejections happen because the incident fell below the client's self-insured retention, and 19% occur because the coverage was less than the total claim.
Insurers are proactive in their efforts to mitigate damage and loss, with 71% of insurance brokers partnering with cybersecurity providers to better serve clients. In some cases, insurers refer clients to certain cyber risk vendors, with about half of those (12%) negotiating pre-arranged discounts or terms with the vendors.
Brokers are more likely to reject a client due to financial instability (23%), while carriers are more likely to reject potential insureds for missing security protocols (32%). Insurers may initially reject clients for cyber coverage due to inadequate security controls (26%), lack of financial stability (21%), or insufficient information (21%).
Seventy percent of insureds who make claims may find that their rate increases because of a claim. This figure rises to 56% of insureds who face increased scrutiny during the renewal process after making a claim. In some cases, insureds are asked to implement additional controls as a condition of renewal (7%).
Regulatory requirements in places like the U.K. and Ireland incentivize organizations to mitigate cyber risk, with cyber insurance serving as a part of those strategies. The technology sector in North America is the most prominent provider of cyber risk control tools and services in the global cyber insurance market, driven by multinational companies enhancing mobile IT infrastructure and innovative management software services to meet compliance and competitive demands.
Interestingly, the report highlights a discrepancy between cyber coverage figures provided by brokers and those supplied by businesses, with a 20% gap. This discrepancy underscores the importance of clear communication and thorough understanding between brokers and their clients.
As cyber threats continue to evolve, the cyber insurance market is expected to grow, with 70% of insurance professionals expecting the number of new cyber claims to increase due to growing threat activity. In this context, understanding the trends and nuances of the cyber insurance market is crucial for both brokers and insureds alike.
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