During the COVID-19 pandemic in 2021, cyber insurance rates more than doubled due to the surge in ransomware attacks, as reported by Howden. Ransomware attacks involve encrypting victims’ data and demanding cryptocurrency payments in exchange for a passcode to retrieve the encrypted information.
However, the number of global ransomware attacks declined by 20% in 2022 compared to the previous year, coinciding with the start of the conflict between Russia and Ukraine. Hackers in these countries shifted their focus to military-related activities, leading to a decrease in cyberattacks.
Insurers have responded to the evolving landscape by urging clients to enhance their protective measures against cyber threats. This proactive approach has contributed to a reduced risk perception, attracting underwriters back into the cyber insurance market.
Shay Simkin, Global Head of Cyber at Howden, expressed that there is now a renewed appetite for writing cyber insurance among insurers. Increased competition within the market has played a role in driving down rates, according to Howden’s report.
In terms of market size, cyber insurance premiums reached over $12 billion in 2022, surpassing the $10-11 billion range recorded in 2021, as outlined by Simkin. Howden predicts that the market will continue to expand, potentially reaching approximately $50 billion by 2030, given the magnitude of cybercrime.
Ransomware attacks saw a notable increase of 47% in the first quarter compared to the same period in the previous year, demonstrating hackers’ renewed focus on achieving commercial gain.
Simkin said that, ultimately, hackers are driven by financial motivations. With the decrease in ransomware attacks and the efforts of insurers and clients to bolster cybersecurity measures, the cyber insurance industry is experiencing a shift that is reflected in the declining rates observed in June.
