Cyber ​​Insurance Rates Drop as Business Security Improves

Illustration of cyber attacks (photo: x @acqua_tech1)

JAKARTA - Global cyber insurance premiums have fallen as businesses become more adept at mitigating cybercrime losses, despite a surge in ransomware attacks, broker Howden reported on Monday, July 1.

Insurance premiums to protect businesses from cyberattacks surged in 2021 and 2022, as the COVID-19 pandemic fueled a surge in cybercrime incidents. However, premiums have fallen in the past year, according to Howden's annual report. "The cyber insurance market saw a double-digit price decline in 2023/24," Howden said.

Additional security measures such as multi-factor authentication have helped protect business data, reducing insurance claims. "MFA is the most basic thing you can do, like locking your door when you leave the house," said Sarah Neild, head of UK cyber retail at Howden. Neild added that cybersecurity is complex with many layers, including greater investment in IT security and staff training.

"Overall, clients are more resilient," Neild said. A greater offer from insurers to provide cyber insurance has also led to lower prices, despite the increase in attacks.

Although global ransomware attacks declined after Russia's invasion of Ukraine in February 2022, ransomware incidents increased 18% in the first five months of 2024 compared to the previous year, the report said.

Business interruption costs are typically the biggest expense after a cyberattack, but businesses can reduce those costs with better backup systems, such as through the use of cloud providers, the report said.

The bulk of the cyber insurance business is in the United States, but the $15 billion global cyber insurance market is likely to grow fastest in Europe in the next few years, with lower penetration rates currently, the report said.

Smaller companies are less likely to buy cyber insurance, in part due to a lack of awareness of cyber risks, the report added.