‘Exponential’ rise in claims pushes IT security laggards out of cyber market; rates spike for others

A spike in cyber claims has insurers walking away from clients with weaker IT security and pressing major rate increases and stricter terms on even the most secure companies, a quarterly survey by the  Council of Insurance Agents & Brokers (CIAB) has shown.

"Carriers continued to take a hard line on cyber risks in Q3 2021," said Ken Crerar (pictured), chief executive officer of CIAB, in the latest edition of CIAB's Commercial Property / Casualty Market Index report.

Some 93 percent of survey respondents claim an increase in demand for cyber coverage, neighborhood twice the level for most other lines.

But with cyber still atop the list of segments where claims are visibly growing, as claimed by a stable 3/4 of the panel, supply doesn't always and everywhere meet demand.

"Cyber was again the most troubled line in Q3 2021," authors wrote.

Underwriters are said to be "more demanding in reviews and requirements," one survey participant claimed, citing higher retentions, higher premiums and lower limits. Deductible increases in cyber are considered "rampant" among all classes of clients.

"Some respondents noted their clients couldn’t get coverage at all if they did not implement specific carrier-requested cybersecurity measures," authors noted from responses.

Drivers behind the 27.6 percent Q3 rise in cyber rates include "exponential" increases in frequency and severity of claims, authors say from survey responses.

Increasing ransomware attacks are a primary concern on an "uptick" in claims. A majority of survey participants report at least one client receiving a damages payment.

Beyond ransomware, the widespread move to remote work environments was said to bring an increase in phishing and social engineering claims. "Cyber theft is very common now," one participant said.