Ransomware will be the main claims story of 2020: Aon
US cyber insurers saw a 10-point loss ratio deterioration in 2019 due to the impact of an increase in ransomware attacks and rise in claim frequency, finds a new study by Aon. Analysts expect that "ransomware will be the main claims story of 2020 as well".
The insurance industry experienced the impact of the increase of ransomware attacks in 2019. Losses were spread across companies of all sizes, especially the small commercial segment.
According to the report, the loss ratio increased from 35 percent in 2018 to 45 percent in 2019, driven by claim frequency. The average 2019 claim frequency across all companies was 5.6 claims per 1,000 policies, up from 4.2 in 2018.
Aon noted that despite the increased loss ratio, the report’s combined ratio for 2019 suggested "continued profitability" for the US cyber insurance industry in 2019.
The US cyber premiums grew to $2.26 billion in 2019, an 11 percent increase from the year prior. Some 90 insurers wrote more than $1 million and 41 wrote more than $5 million. Overall, the top 10 cyber insurers accounted for 69 percent of direct written premium, slightly down from 70 percent last year.
Jon Laux, head of cyber analytics for Reinsurance Solutions at Aon, said: “Although ransomware has been on the rise for years, it was 2019 when the insurance industry felt the impacts far and wide. Unlike the NotPetya claims of 2017, these losses were not limited to a few large multinationals but were spread across companies of all sizes, and especially affected the small commercial segment. We expect that ransomware will be the main claims story of 2020 as well.”
Laux added: “For years now, the thesis of cyber insurance has been that risk mitigation and risk transfer belong together – that insurers can help companies that suffer from cyberattacks to get back on their feet while working to reduce cyberattack frequency and severity through more effective risk controls. We believe that the next several years may finally see this come to fruition with insurers helping improve cybersecurity hygiene and reduce the cost of cyberattacks.”
