A recent study by Recast Software and Ponemon Institute found the cybersecurity insurance market is witnessing a significant uptick in demand. This rise comes as the scale and cost of cyberattacks continue to rise. The study, conducted in the Fall of 2023, revealed that 41% of organizations experienced a surge in cybersecurity incidents. That prompted a surge in the adoption of cybersecurity insurance.
Rising Threat Landscape
Among the 631 IT and security professionals surveyed, 41% reported increased cyber incidents in 2023. Shockingly, 61% reported the average cost of these attacks amounted to $21 million. And 75% of organizations anticipate a rise or maintenance of their cybersecurity exposure in the coming year.
Insurance as a Shield
Almost half (49%) of respondents noted a substantial improvement in their cybersecurity posture after acquiring insurance. However, 48% switched insurers due to policy cancellations (25%), cost concerns (21%), or better coverage and pricing elsewhere (18%). The majority (65%) invested premiums ranging from $6 million to over $100 million.
Coverage and Satisfaction
While 43% found their cyber insurance coverage sufficient, 67% said they were “extremely satisfied” with their coverage. Nevertheless, 53% of organizations filed a claim following a cybersecurity incident, with, on average, only 46% of losses covered. Satisfaction with insurers’ claim responses was below half, indicating room for improvement.
Insurer Requirements and Challenges
Half of the respondents found it challenging to comply with insurers’ requirements. Regular vulnerability scanning (51%) and specific security practices and technologies (55%) were mandatory. Notably, 49% required adequate staff to support cybersecurity, and 48% mandated multi-factor authentication.
Looking Ahead
Will Teevan, CEO of Recast Software, emphasized the study’s goal to assist IT and security leaders in assessing their cyber insurance needs amid escalating cyber threats. Teevan commented, “We know from talking to our customers that they are more concerned than ever about the scale and cost of cyber attacks. We think this research will guide their decision-making in terms of adding or expanding insurance coverage to account for these challenges.”
Dr. Larry Ponemon, chairman and founder of Ponemon Institute, highlighted the critical shift of cybersecurity insurance from an IT security concern to a business priority, necessitating attention from senior leadership and boards of directors. “The cost of a single data breach, ransomware attack or other security incident can adversely impact the most solid financial balance sheet,” said Poneman.
As organizations grapple with the evolving cybersecurity landscape, the study provides valuable insights to guide strategic decisions in defending against cyber threats.
Source: Report: Cyber Insurance Market Heats Up as Scale and Cost of Attacks Rise
Full Report: State of Cybersecurity Insurance Adoption
Other News: How Much Is Cyber Insurance? (Opens in a new browser tab)