08/17/2021

How Remote Work is Raising Premiums in the Cyber Insurance Market

It’s important to shop around for the best policy

Over the past 18 to 24 months, as remote work rose because of the pandemic, there has been an explosion in both the number of ransomware events, where cyber attackers lock user systems until a ransom is paid, and an increase in the average individual ransom payments. These factors combined have required insurance carriers to pay out an unprecedented amount of money in claims to fulfill extortion demands of cyber criminals.

Unfortunately, many associations have felt the sting of a ransomware event. The large ransom payment payouts and the costs to unencrypt data and to help policyholders restore and improve their IT systems has put tremendous pressure on underwriters of cyber insurance. Insurers are looking to shore up their books and tighten criteria to limit the future financial exposure of additional ransomware activity. To make matters worse, the trend lines are only continuing to increase.

The cost to provide cybersecurity insurance that includes coverage for cyber extortion has ballooned so much that carriers and underwriters are rapidly revising their business models, and that means they are exploring three main options: significantly increasing the cybersecurity hygiene requirements of their clients, drastically increasing cyber insurance premiums or exiting the cybersecurity insurance market altogether.

Please select this link to read the complete article from ASAE's Center for Association Leadership.