According to Willis Re, a globally recognized reinsurance provider, global cyber reinsurance rates have soared by up to 40% in the July renewal season as ransomware attacks increase in number and severity. In May 2021, a ransomware attack on Colonial Pipeline shut the largest fuel pipeline network in the United States for several days, crippling fuel delivery to most of the East Coast.1 The average ransom payment made by a business to restore data after a cyber-attack was $220,000 in the first quarter, up 43% from the last quarter of 2020.1 The aftermath of an attack like this is detrimental to a company’s finances. Unfortunately, fighting cybercrime on the front-end is also becoming increasingly expensive.
Cyber insurance and reinsurance policies can cover the cost of restoring the network, business interruption losses, and even the hiring of a PR agency to address reputational damage. Reinsurance rates are expected to mimic the increased costs of risk maintenance.2
The environment of higher uncertainty of claims and potential attacks has driven better underwriting discipline and improved pricing trends.3 Experts are hoping that this can creating a more stable outlook for the sector into 2022.
Footnotes:
1 Reuters. “Cyber Reinsurance Rates Rocket at July Renewals -Willis Re.” Reuters, Thomson Reuters, 1 July 2021, https://www.reuters.com/technology/cyber-reinsurance-rates-rocket-july-renewals-willis-re-2021-07-01/.
2 “Cyber Liability Insurance: Martin Insurance: Lancaster, PA.” Martin Insurance, 26 Mar. 2021, https://www.martininsurance.com/commercial/cyber-liability/.
3 Zurich. “Swiss Re Sees Positive Outlook for Renewals, Further Market Hardening Expected: Swiss Re.” Swiss Re Sees Positive Outlook for Renewals, Further Market Hardening Expected, Swiss Re Group, 5 Oct. 2021, https://www.swissre.com/media/news-releases/nr-20200908-swiss-re-sees-positive-outlook-for-renewals.html.