Cybersecurity
The cost of cyber insurance has risen – is being insured worth it?
By John Wareing, insurance sector specialist at Red Helix. C
yber security attacks are increasing at an alarming rate and continue to rise in scale and complexity, affecting essential
services, businesses and individuals alike. Due to the accelerating pace of digitalisation and major advances in network technology, we have become more reliant on our devices. As a result, this has created an array of new endpoints for criminals to target which has subsequently led to hacking offences more than doubling in the year ending March 2022, compared with the year ending March 2020. Not only has the number of crimes increased, but
the impact and aftermath of a cyber-attack can cause a ripple effect for years. Criminals are gaining access to huge amounts of personal data from enterprises, including bank details and ID documents, as seen in the recent attack on Arnold Clark. Owing to the higher severity of breaches, the frequency and value of
pay outs has gone up, and so has the price of cyber insurance which has risen by 66% in the third quarter of 2022 – following a peak increase of
32 | April 2023
102% in the first quarter. In fact, the average cost of a single attack in the UK has reached a seven-year high at £4.56 million which has, in turn, had a major impact on both the rates and the requirements for cyber insurance. While policies will always differ between insurers,
there is an ever-growing checklist of requirements that organisations need to adhere to in order to be accepted. It is no longer an expectation that companies show they’ve taken appropriate action to protect themselves against cyber-crime, it is a requirement. And those that can’t prove they have provided sufficient technical solutions and training to secure their network will be denied insurance or refused payment when making a claim. This comes alongside an increased number of
exemptions from insurers as to what they will, and will not, cover. One of those most notable of these recently was Lloyd’s of London’s decision to no longer protect against ‘state-sponsored attacks’, which means that any attacks that an insurance company could claim were linked to a nation-state would no longer be covered.
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