Cyber Markets Might Be Stabilizing, but Pre-breach Services Are Essential in Keeping Your Firm Safe
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It’s been a rough few years for cyber insurance. COVID caused disruptions in 2020 and 2021, bringing dramatic rate increases as insurers tried to correct the market after a spike in severe ransomware attacks.
“It went from a soft market to a hard market overnight,” said Todd Szalkowski, Associate Vice President, Cyber and Professional Liability, Nationwide. “Ransomware claims were going through the roof, BI claims were going up and carriers decided to make some market corrections.”
These trends have made cyber risk top-of-mind for insureds and for good reason: In 2020, average ransomware remediation costs reached $1.85 million, Cyber Security Media reported. Then 2021 came, and the average ransomware demand — not including eventual remediation costs — for cases handled by the cybersecurity firm Palo Alto Networks rose by 144% to $2.2 million, an increase of 144% when compared to demand costs from the previous year. Remediation costs are higher than demand costs because they include the demand and additional things like business interruption and recovery costs.
“If companies have a ransomware event or a business interruption event and they can’t produce the goods or services that they need, that’ll have a significant impact on their revenues,” Szalkowski said.
Even if rate increases aren’t as severe this year, insureds will need to continue prioritizing cybersecurity efforts if they want to remain an attractive risk for carriers. Partnering with an insurer that offers pre-breach services can help companies keep their cybersecurity systems up-to-date and ready for an attack.
“2020 and 2021 was a time where there was significant change in the market,” Szalkowski said. “Pre-breach services definitely help change the risk profile of an insured, because if you know that they’ve gone through these steps, you know that they are taking the right steps to make things stronger and making them more capable in the event of an incident.”
To learn more about Nationwide, please visit their website.