Facing the latest impacts of cyber-crime: cyber insurance premiums increase for businesses
As Australian businesses are forced to adapt to a new normal yet again, a different type of challenge continues to brew under the surface.
Cyber crime may not be new news, but the recent surge of cyber attacks, and the severity of these attacks means businesses can no longer afford to ignore this very real threat.
Recent increases in cyber crime have significantly impacted the cyber Insurance market too, leading to an increased number of claims which has resulted in driving up insurance premiums, and insurers even having to limit coverage in some areas.
The current cyber landscape
While cyber crime skyrocketed immediately after COVID-19, the reality is that the possibility of businesses suffering from attacks has been present for many years.
Not only is cyber crime constantly on the rise, one form of cyber attacks, in particular, have seen especially high instances in the last year – ransomware attacks.
In 2020, the number and variety of ransomware attacks exploded. There has been a 60 per cent increase in ransomware attacks against Australian entities in the past year, with experts coining this phenomenon a ‘tsunami of cyber crime’.
There is an increasing concern that Australian organisations have been quietly paying millions of dollars in ransom to hackers, creating a vicious cycle of criminal activity.
Australia is a lucrative target for cyber criminals worldwide for a number of reasons: a prosperous economy, heavy reliance on digital technology, combined with an overall culture of complacency where many companies are not adequately prioritising cyber security.
What does this mean for businesses and their cyber insurance
This exponential increase in ransomware attacks has had a significant impact on the cyber insurance market.
Some businesses are seeing substantial increases to their cyber insurance renewal premiums at up to 40 per cent. While increases to insurance premiums are often a hard pill to swallow, in the current landscape of increasing cyber-crime, the steep rise in cyber insurance costs is inevitable.
As premiums are determined on the likelihood of a business having to make a claim, the overall increase in claims activity caused by increasing cyber-crime has resulted in the insurance market raising premiums.
In addition, insurers have also chosen to limit coverage in a portfolio if a business isn’t able to demonstrate having appropriate cyber security measures in place.
Strengthening your defence
In the current climate, business readiness and having risk protocols in place to mitigate the risk of a cyber crime is vital for companies and management teams to prioritise.
While increased premiums may lead some companies to rethink their cyber coverage, compromising on this protection may lead to substantial financial impacts if your organisation happens to fall victim to cyber crime.
Because Cyber Insurance can include cover for ransomware attacks, self-insuring in this environment may translate to your business needing to pay significant amounts in ransom further down the track.
For businesses that already hold cyber insurance with an upcoming renewal, engaging your insurance broker as early as possible can help you understand what necessary steps you need to take to be insurable and obtain adequate cyber insurance coverage.
Brokers such as Aon can offer consultative services and undertake a detailed assessment of your business to advise on risk mitigation strategies that you can take. This will not only help present your business to the insurance market in a better light, but also allow you the time to put in place appropriate mitigation strategies, which can further help the cover and premium your business is issued with.
Learn more at aon.com.au/cyber insurance