The Rising Cost of Cyber
12 August 2022
Only 43% of UK businesses have an insurance policy in place that protects them against cyber risks – shockingly only a tiny fraction (5%) of these have specific cyber policies catered to their needs.
The modern risks businesses need to protect against now, such as cyber, wouldn’t even have been considered by most businesses 20 years ago, yet over the last few years the products available have become quite sophisticated and more of our clients now consider this a vital part of their insurance programme. Cyber packages now can include threat warning intelligence, forensics, post-breach communications and data recovery.
The lockdown in March 2020 in response to the Covid-19 pandemic challenged businesses with the need for their office staff to work from home, but it also brought new opportunities for cyber criminals. The Cyber Security Breaches Survey is an influential research study for UK cyber resilience, their report details 39% of businesses suffering a cyber attack in 2021. More than half or those believed their exposure was heightened due to home working arrangements.
Ransomware and phishing attacks also increased during the pandemic with cyber criminals using this as a hook, and attacks are still on the rise. Ransomware was ranked as the top cyber exposure of concern in 2022 in the Allianz Risk Barometer. And just when we thought we were through the pandemic, Russia’s attack on Ukraine brought additional cyber concerns.
Cyber incidents can have a devastating impact on businesses, and few have the in-house resources to deal with an attack or breach. The disruption to day-to-day operations can be catastrophic, when combined with financial loss, reputational damage and fines some businesses may not even survive an attack.
But the insurance market is responding with more sophisticated offerings not only to protect businesses, but to deploy the resources required to get them back to business as usual too. As the cyber landscape continually evolves, so does the insurance offering. However, cyber insurers are seeing more claims as the number of incidents rise, along with the take-up of cyber insurance and this is having an impact on both premiums and availability. The recent surge in ransomware claims has driven up cyber insurance pricing by up to 92%.
Insurers are now more cautious about the risks they take – if your cyber security is poor and you are at a greater risk of attack, you may find it financially prohibitive to obtain cyber cover, or you may not find an insurer willing to take your risk. Insurers need to be assured that you are taking appropriate steps to protect yourself against cyber threats with Virtual Private Network (VPN) and multi-factor authentication (MFA) now a standard requirement.