Cyber Insurance in 2024: Insights from Howden’s Latest Report
According to a recent report from the Howden Group titled “Cyber Insurance; Risk, Resilience and Relevance,” the cyber insurance industry is expected to undergo rapid change in 2024. This report provides insights into the state and future trends of the cyber insurance market. This short summary for insurance professionals and executives in Massachusetts highlights some findings from Howden’s viewpoint.
Current State of Cyber Insurance Market
The global cyber insurance market has shown resilience and growth over the years, with prices becoming more favorable for buyers after several years of significant premium increases.
Howden’s Global Cyber Insurance Pricing Index indicates a 15% price decrease since mid-2022, allowing businesses to secure coverage at more favorable rates than previously. Despite this adjustment, the market continues to expand, with global premiums estimated to reach $40 billion by 2030 from around $15 billion in 2024. This growth highlights the growing importance of cyber insurance in protecting intellectual property and digital assets.
Evolving Cyber Threat Landscape
The Howden report focuses on the evolving landscape of cyber threats, which sheds light on the changing and complex nature of cybersecurity risks for insureds and insurers. The threat posed by ransomware has resulted in a noticeable 18% increase in incidents from 2023 to 2024.
While the frequency of attacks has risen, there are trends in terms of severity. Recovery costs are on the rise again after a decline in 2022. Interestingly, fewer companies have either needed or opted to pay ransoms. The report attributes this decline in ransom payments to risk management practices and effective response strategies.
Geopolitical factors shape cyber threats, with state-sponsored attacks and support from hostile governments posing new challenges for insurers and businesses. Howdens analysis suggests that these geopolitical dynamics will significantly impact cyber risk profiles in the future.
The report also highlights the emergence of AI as both an asset and a potential tool for cybercriminals. While AI can bolster cybersecurity measures, it also poses challenges by increasing the complexity of attacks and making them harder to detect.
A critical issue emphasized in the Howden report is the looming threat of risks within the cyber insurance market.
Recent notable incidents, like the MOVEit and Change Healthcare attacks, have highlighted the impact of vulnerabilities that cause disruptions across various organizations. These incidents are a wake-up call for insurers and insured parties to carefully evaluate and address supply chain risks and potentially vulnerable entry points.
The report points out the challenge insurers face in balancing their risk tolerance with market growth opportunities. While there is a trend towards market stability, Howden stresses the importance of insurance providers continuing to innovate and refine their underwriting strategies to remain competitive and profitable.
Future outlook
Looking forward, the Howden report emphasizes the significance of innovation in brokering and underwriting services within the cyber insurance marketplace. With the evolving cyber threat landscape, risk transfer and mitigation strategies must evolve to counter and mitigate these threats.. This could involve exploring insurance policy structures utilizing analytics for risk evaluation or creating tailored solutions for specific industry sectors.
Furthermore, the report underscores the importance of risk management and resilience practices. According to Howden’s analysis, investing in cybersecurity measures such as conducting risk assessments and implementing employee training initiatives can decrease susceptibility to cyber-attacks while improving parties’ chances of securing favorable insurance terms.
For insurers, stand-alone cyber insurance policies have returned to providing profitable underwriting opportunities. Per the chart from Howden’s report, these policies generated nearly five billion in premiums and loss ratios for 2022 and 2023 in the low forty percent ranges.
Conclusion and access to Howden’s full report
In summary, the Howden report offers a detailed look at the status and future direction of the cyber insurance market. This information is particularly important for insurance professionals and executives in Massachusetts to grasp the landscape of cyber risks and opportunities. Keeping abreast of these trends and insights as the cyber insurance market progresses will be crucial for navigating the challenges and opportunities.
Those interested in accessing the free 61-page report can visit the Howden Cyber Insurance Report website.
