COVID-19 to fuel cyber losses and insurance price rise, finds Willis Re survey
Risk specialists believe the overall level of cyber attacks will go up and the pricing for cyber insurance will increase as a result of COVID-19, according to a global survey by the reinsurance division of Willis Towers Watson.
The responses from a wide cross-section of those working in risk management, claims, underwriting, legal, broking, and analytics in 56 countries revealed that the pandemic has increased cyber risk.
Data breach, ransomware, and business interruption will be the main cause of losses, with an overwhelming majority (86 percent) of respondents expecting the cyber attack frequency to increase and over half (54 percent) expecting the severity to rise post-pandemic. A large majority of respondents (74 percent) think pricing for cyber insurance will increase.
Nearly 32 percent of respondents believe BI is the most likely source of loss, up from just 10 percent before the pandemic, as awareness of the coverage class has soared during the COVID-19 crisis. Data breach fell as the anticipated leading cause of loss, from 53 percent to 33 percent of respondents.
The forecast rise in post-COVID-19 losses may be a result of the sudden, wide-scale transition to remote working, since the shift has increased the cyber vulnerability of many businesses, Willis Re said.
Furthermore, the expectation of a catastrophic cyber event leading to claims of $10 billion or more has increased since the pandemic. Before COVID-19, only 13 percent of respondents stated such an event was “likely” during the next five years. Today, a third of respondents believe a $10 billion+ loss event is at least a five-year event. The concern is greatest in Asia-Pacific, where half of respondents see this potential frequency for cyber catastrophes.
Mark Synnott, global cyber practice leader, Willis Re, said: “This year’s survey shows quite clearly that risk professionals around the world believe that the pandemic has increased cyber risk, in some cases dramatically. They expect the insurance industry to respond, but unfortunately not in the way we might hope.
"While three quarters of the people we surveyed think demand for cyber cover will increase post-COVID-19, only 45% think supply will increase, which perhaps explains why three-quarters think the cost of cover will rise. The insurance industry has some work to do to ensure these expectations are not met.”