Part 4. Insurance brand beacons
In 2017, cyber insurance was cheap and came with very few strings attached. Loss ratios had been low for several years, luring numerous insurers into the market. Businesses could easily obtain coverage without the most basic security precautions, such as two-factor authentication, timely backups, and endpoint detection and response software. Those who sought to impose even basic security standards were circumvented by the brokers in favor of less fussy insurers. Cyber insurers lay foundations for stronger brands
Shock to the System: US Cyber Loss Ratios, 2017 - 2020
80%
73%
70%
67%
60%
59%
50%
47%
45%
42%
40%
37%
35% 34%
35%
30%
32%
29%
20%
10%
0%
Standalone
Total
Packaged
Source: Aon, Fitch Ratings
Then came the fall of 2019. Ransomware demands, which had generally stayed below $20,000 for several years, suddenly began to climb steeply. Ransom demands for more than $1 million were no longer rare. Loss ratios for standalone cyber policies in 2019 were up by 13 percentage points over 2018, and they jumped 26 percentage points farther in 2020. And the attacks were heavily concentrated on the soft targets with poor cyber hygiene.
Since the beginning of 2020, cyber insurance rates in the US have more than doubled. The overall quality of insurers’ portfolios has also improved enormously due to the extensive risk management precautions that insurers have encouraged – and often required – customers to take. In the process, insurers have built stronger customer relationships based on frequent interactions.
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