- The cyber insurance market is showing signs of stability as demand for coverage remains high, spurring a multi-year period of growth to cover the majority of losses that remain uninsured, according to a Tuesday report by Moody’s Investors Service.
- Sharp price increases are leveling off as the cyber insurance sector has become more profitable and previous constraints on supply have eased up.
- As the market has matured, insurance firms have tightened requirements for companies to maintain coverage, for example forcing companies to strengthen their cyber hygiene practices.
The market is stabilizing after years of turmoil, where price increases escalated and supply constrained the market, making it difficult for many companies to obtain coverage.
“Demand continues to remain strong for cyber insurance, and could rise further as rate increases have declined significantly from one year ago,” said Michael Dion, VP at Moody’s Investors Service.
Whether payouts for policy claims are sufficient to cover ransomware payments or data breach costs depends on the policy terms and how comprehensive the coverage is on the cyber insurance policy, Dion said.
The instability in the market had raised major concerns among critical infrastructure providers and other private sector companies, as the Ukraine war increased the threat of sophisticated cyberattacks. Ransomware has been a growing problem among top companies and an increasing number of small- to mid-market businesses.
For many providers of critical infrastructure, the risk profile changes, particularly when the risk of an attack can disrupt operations over multiple days and weeks.
Manufacturing and industrial firms tend to have high risk transfer practices, according to Dion. For example, many of these types of companies will buy standalone cyber insurance in addition to having coverage for cyber under traditional insurance policies.
A separate report from Guy Carpenter, a global risk and reinsurance specialist and unit of Marsh McLennan, values the U.S. domiciled cyber insurance market at about $9 billion. In 2019, the U.S. market for cyber premiums was only about $2.6 billion.
Correction: In a previous version of this article, Marsh McLennan was misidentified.