Most cyber insurance buyers have been hit by complex and time-consuming renewals so far in 2021, according to broker A J Gallagher, while rates “show no real signs of levelling off in the near term”.
Many buyers were left with “less coverage at a higher cost”, Gallagher says in its first-half review of the cyber insurance market, and buyers faced significant limits on capacity, narrower terms and much higher rates.
Gallagher says underwriters have turned “a laser focus” on data security controls when looking at renewal risks, with “even greater underwriting scrutiny” of cybersecurity controls expected for the remainder of 2021.
Buyers without preventative controls, such as multifactor authentication, remote desktop protocol or segregation of networks and encryption, will be met with carriers “refusing to quote” or see rates hiked by between 100% and 200%, but in some cases as high as 300%. Underwriters are also seeking additional ransomware applications before quoting.
“Even the best-in-class risks that comply with all underwriting required security controls are seeing increases in the 40% to 60% range,” Gallagher says.
Risk appetite has waned for some sectors altogether, Gallagher says, with municipalities, education and manufacturing particularly squeezed. But capacity is expected to shrink across the cyber insurance market during the second half of 2021, Gallagher adds, and rates will be driven further upwards by higher reinsurance costs for carriers.