Demand for cyber cover up in Spain just as capacity falls and prices rise

Demand for cyber insurance is on the rise in Spain, following a spike of incidents such as ransomware attacks, and the tightening of cybersecurity rules by the European Union. But at the same time, the insurance market is reducing capacity and increasing scrutiny on cyber insurance buyers, in an example of how the hard market is creating challenges for Spanish companies. According to the latest study on cyber security in Spain published by Aon, cyber insurance premiums reached €75m in the country last year. The broker estimates that the volume of renewed premiums was between 25% and 60% higher than in 2019. Higher premium rates are accountable for part of the reason for the increase, but Aon has also spotted a growing number of Spanish companies purchasing cyber insurance for the first time. Among the drivers of demand is a strengthening of European cybersecurity regulations, which include a new cybersecurity strategy approved in December 2020, as well as publication of the draft Digital Operational Resilience Act in September last year. Spanish companies have also been spooked by a sharp increase of cyber incidents such as ransomware attacks. High-profile losses like the interruption at Spain’s jobs agency SEPE in March have placed the threat high on the list of priorities for Spanish firms. However, although demand for cyber cover is increasing, capacity has gone in the other direction. Aon estimates that the highest limits available for buyers dropped 45% last year, reaching Ä165m. And this amount is only available for exceptional cases. The general capacity for large cyber risks has dropped 60% to Ä97.5m, according to Aon. And things are getting worse for buyers in 2021. Aon reports that the maximum capacity offered by insurers in Spain has dropped further to Ä130m. Lower capacity is not the only challenge faced by buyers. According to Aon, insurers are constantly changing their underwriting guidelines as they try to keep up with the evolution of cyber risks. Furthermore, quotes are valid for a mere 30 days. Aon notes, however, that there is still enough capacity to meet the demands of the largest cyber insurance programmes in Spain. The Aon research also finds that critical infrastructure companies bought the highest amount of cyber insurance last year, taking out 28% of the total among Spanish organisations. These companies include telecoms, energy firms and banks, among others. Manufacturers accounted for 27% of total premiums, while professional services had a 20% share in 2020. Worryingly, however, a pitiful 2% of cyber insurance sold by insurers last year was bought by entities linked to the several layers of Spanish government. Aon stresses in the report that these are exactly the kinds of companies most exposed to cyberattacks currently, as hackers target their lack of preparedness to make a quick buck. Participants in a web conference organised by Aon to present the study urged government entities and companies alike to put much emphasis on the assessment and mitigation of cyber risks, which means looking forward rather than leaning on past experience. “Ransomware is only one kind of attack and it is always evolving,” said Jose Carlos Jimenez, a senior underwriter at AIG in Spain, during the conference. “In cybersecurity, when you think about the present, you are already thinking about the past,” he added.

Demand for cyber cover up in Spain just as capacity falls and prices rise

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