Organizations will face significant challenges in purchasing, renewing, and benefitting from cyber insurance policies this year as various factors drive the sector towards a stricter, more specialized position, global specialists in law, risk, and cybersecurity predict. These include the continued evolution and impact of cyberthreats throughout 2020 and the early months of 2021, chiefly in the form of ransomware attacks and wide-ranging supply chain security issues.
As a result, insurers are likely to carry out enhanced cybersecurity risk analysis of companies seeking to purchase or renew policies this year with increased premiums, stricter indemnity limitations, refusals to fully pay out on claims, and denial of coverage possible ramifications for organizations. “The cyber insurance market is tightening, with insurance providers demanding more from policyholders before issuing a policy or renewing one,” Jack Kudale, founder and CEO of Cowbell Cyber, a US-based provider of AI-powered cyber insurance, tells CSO.
Sean Cordero, security advisor at Netenrich, concurs, adding that, for the first time, insurers will request new evidence and validation from their policyholders to prove their cybersecurity adequacy and minimize their exposure. “Each new request for coverage will have increased scrutiny…. For organizations seeking to obtain or maintain coverage, the difficulty of getting sufficient coverage will increase due to greater scrutiny of the insured security practices and exposure during the underwriting process.”
While Kudale argues that a more detailed assessment of a company’s insurable risk profile should be a welcome evolution, he admits “we are currently seeing traditional carriers in some cases doubling the premium, reducing the limits in half or simply unwilling to renew certain industry classes in order to maintain their aggregated risk.”
How cyberthreats affect cyber insurance