With the cyber risk hazard environment—ransomware, business interruption and aggregation—worsening significantly, “prospects for the U.S. cyber insurance market are grim,” according to an AM Best report.
According to the global rating agency’s analysts, insurers “urgently need to reassess all aspects of their cyber risk, including their appetite, risk controls, modeling, stress testing and pricing, to remain a viable long-term partner dealing with cyber risk.”
The reassessment is needed because cyber insurance, which began as a diversifying, secondary line and another endorsement on policies, is now a “primary component of a corporation’s risk management and insurance purchasing decisions,” notes Best’s in its report, “Ransomware and Aggregation Issues Call for New Approaches to Cyber Risk.”
The loss ratio for cyber insurance rose dramatically in 2020, to 67.8%, from 44.8% in 2019. However, the increase was not limited to just a few insurers—the loss ratio rose for 15 of the 20 largest cyber insurers, AM Best reports.
“The rate increases for cyber insurance outpaced that of the broader property/casualty industry, but the increase in cyber…
