CyberInsurance Predictions for 2023

It is difficult to predict with certainty what the top trends in cyberinsurance will be in 2023, as the field is constantly evolving and new developments are emerging all the time. However, based on current trends and expert analysis, there are several areas that are likely to be particularly important in the coming years. Here are the top 10 trends in cyberinsurance that we expect to see in 2023:

Increased Demand for Coverage

Cyberinsurance has become increasingly popular in recent years, and this trend is expected to continue. One reason for this is the growing number of cyberattacks and data breaches that have occurred in recent years, leading to costly losses for businesses. For example, in 2021, Colonial Pipeline suffered a ransomware attack that resulted in losses of over $4 billion, leading to a surge in demand for cyberinsurance coverage. In addition, as more and more businesses and organizations rely on technology and the internet to operate, the risk of cyberattacks and data breaches is only increasing, making cyberinsurance an increasingly important consideration. In addition, new types of threats call for new types of coverage. “Cyber” policies not only have to cover data theft and data loss, but new types of fraud schemes, identity thefts and false personations, business email compromise and funds transfer schemes, losses due to cryptocurrency fluctuations and lack of access to crypto trading platforms, SIM swap and authentication scams and losses of data integrity, reliability and resilience.

Greater Awareness of the Importance of Cyberinsurance

In the past, many companies may have considered cyberinsurance to be an optional extra, but this is no longer the case. This is due in part to the increasing prevalence of cyberattacks and data breaches, which can result in significant financial losses and damage to a company’s reputation. For example, a survey conducted by the Insurance Information Institute found that the average cost of a data breach was $3.86 million, highlighting the importance of having adequate cyberinsurance coverage. In addition, as the consequences of not having adequate cyberinsurance become more apparent, more and more businesses are recognizing the importance of having this type of coverage. As insurers move to eliminate cybersecurity-related risks from ordinary CGL or other policies, companies increasingly recognize the need to supplement their normal insurance policies with cyberinsurance policies, but often do not understand the risks they are attempting to mitigate.

A Wider Range of Coverage Options

As the demand for cyberinsurance increases, insurers are likely to offer a wider range of coverage options to meet the needs of different businesses and organizations. For example, some policies may offer coverage for specific types of cyberthreats such as ransomware attacks or data breaches, while others may offer more comprehensive coverage that covers a wider range of risks. In addition, insurers may offer different types of coverage for different types of businesses, such as small businesses or large enterprises, to better meet the needs of these different groups. For example, small businesses may be more interested in coverage that is specifically tailored to their needs and budget. At the same time, larger enterprises may be more interested in more comprehensive coverage that covers a wider range of risks. As a result, underwriting and coverage determinations need to be made in consultation with a company’s risk, legal, compliance, IT and CISO departments, each of which are interested stakeholders.

The Interplay Between Cyberinsurance, D&O, GCL, KRE and Publicity Policies

The various types of insurance policies that businesses may have can be interrelated, and this is particularly true when it comes to cyberinsurance. For example, a company’s directors and officers (D&O) insurance policy may provide coverage for losses resulting from a cyberattack or data breach, as these events can lead to claims against the company’s leadership, but cases like the prosecution of the Uber CISO raise doubts about the scope of such coverage. Similarly, a company’s general commercial liability (GCL) policy may provide coverage for losses resulting from a cyberattack or data breach, as these events can lead to claims against the company for damages or other losses, but exclusions may eat into the scope of this coverage as well. A company’s cyberinsurance policy may also interact with its kidnap, ransom and extortion (KRE) policy, as a cyberattack or data breach may lead to ransom demands or other types of extortion. Finally, a company’s publicity policy may provide coverage for losses resulting from a cyberattack or data breach, as these events can lead to negative publicity and damage to the company’s reputation. It is important for businesses to understand the interplay between these different types of insurance policies, as this can help them to ensure that they have the coverage they need to protect against the full range of risks they may face.

Greater Collaboration Between Insurers and Cybersecurity Companies

Cyberinsurance and cybersecurity are closely related, and it is becoming increasingly common for insurers to work closely with cybersecurity companies to better understand and mitigate the risks associated with cyberattacks and data breaches. For example, some insurers may partner with cybersecurity firms to offer risk assessments and other services to their clients, helping these businesses to better protect themselves. In addition, insurers already require potentially covered entities to conduct (and pass) regular third-party cybersecurity assessments or audits as a precondition for coverage or to answer a series of questions about their cybersecurity programs.

The Role of Government in Regulating and Promoting Cyberinsurance

Governments worldwide are becoming increasingly involved in regulating and promoting cyberinsurance. In some cases, this may involve the development of mandatory insurance requirements for certain types of businesses or organizations, such as those in the health care or financial sectors. For example, the New York Department of Financial Services has implemented a regulation requiring certain financial institutions to have cyberinsurance coverage to improve the resilience of these businesses to cyberattacks. In addition, governments may provide incentives or subsidies to encourage the adoption of cyberinsurance, or they may engage in public education efforts to raise awareness of the importance of this coverage. Moreover, governments are also stepping in to regulate the business of cybersecurity insurance.

The Emergence of Cyberinsurance as a Standalone Product

In the past, cyberinsurance was often bundled with other types of insurance such as property or liability coverage. However, as the demand for cyberinsurance grows, it will more commonly be offered as a standalone product. This trend may be driven by the increasing complexity and specificity of cyberinsurance coverage, as well as the need for businesses to have more granular control over their insurance coverage. Standalone cyberinsurance policies may offer more tailored coverage that is specifically designed to meet the needs of businesses and organizations, and they may allow companies to more easily add or remove coverage as their needs change and as risks change.

The Use of Cyberinsurance to Incentivize Good Cybersecurity Practices

Insurers are increasingly using cyberinsurance as a way to incentivize good cybersecurity practices. For example, companies that have strong cybersecurity protocols in place may be eligible for lower premiums or more comprehensive coverage. This trend is likely to continue in the coming years as insurers seek to encourage businesses to prioritize cybersecurity. In addition, some insurers may offer services or resources to help businesses improve their cybersecurity practices, such as risk assessments or training programs. These present a dilemma for the insured—since the coverage is preconditioned on the audit or assessment, an insurer could deny claims years later based on a false representation that a company’s cybersecurity program was “compliant” or “effective.”

The Growth of Cyberinsurance in Emerging Markets

Cyberinsurance is a relatively new field, and it is still in the early stages of development in many parts of the world. However, as the risks associated with cyberattacks and data breaches become more widely recognized, it is likely that the demand for cyberinsurance will increase in emerging markets. For example, countries in Asia and Latin America are expected to see significant growth in the cyberinsurance market in the coming years. This trend may be driven by the increasing adoption of technology and the internet in these regions, as well as the growing awareness of the importance of cyberinsurance.

The Impact of Cyberinsurance on the Broader Insurance Industry

Cyberinsurance is a relatively new type of insurance, and its growth is likely to have significant implications for the broader insurance industry. For example, the increasing demand for cyberinsurance may lead to a shift in the way that insurance is sold and marketed, with insurers focusing more on the risks associated with technology and the internet. In addition, the emergence of cyberinsurance may lead to increased competition in the insurance market as more and more companies enter the field. Finally, the growth of cyberinsurance may also lead to changes in how insurance policies are structured and priced as insurers seek to better understand and mitigate the risks associated with cyberattacks and data breaches.

Overall, the interplay between different types of insurance policies, such as cyberinsurance, D&O insurance, GCL insurance, KRE insurance and publicity insurance, is complex and multifaceted. Businesses and organizations should carefully consider the coverage they need to protect against the full range of risks they may face, including those related to cyberattacks and data breaches. By understanding the interplay between these different types of insurance policies, businesses can better ensure that they have the coverage they need to protect against the full range of risks they may face.

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Mark Rasch

Mark Rasch is a lawyer and computer security and privacy expert in Bethesda, Maryland. where he helps develop strategy and messaging for the Information Security team. Rasch’s career spans more than 35 years of corporate and government cybersecurity, computer privacy, regulatory compliance, computer forensics and incident response. He is trained as a lawyer and was the Chief Security Evangelist for Verizon Enterprise Solutions (VES). He is recognized author of numerous security- and privacy-related articles. Prior to joining Verizon, he taught courses in cybersecurity, law, policy and technology at various colleges and Universities including the University of Maryland, George Mason University, Georgetown University, and the American University School of law and was active with the American Bar Association’s Privacy and Cybersecurity Committees and the Computers, Freedom and Privacy Conference. Rasch had worked as cyberlaw editor for SecurityCurrent.com, as Chief Privacy Officer for SAIC, and as Director or Managing Director at various information security consulting companies, including CSC, FTI Consulting, Solutionary, Predictive Systems, and Global Integrity Corp. Earlier in his career, Rasch was with the U.S. Department of Justice where he led the department’s efforts to investigate and prosecute cyber and high-technology crime, starting the computer crime unit within the Criminal Division’s Fraud Section, efforts which eventually led to the creation of the Computer Crime and Intellectual Property Section of the Criminal Division. He was responsible for various high-profile computer crime prosecutions, including Kevin Mitnick, Kevin Poulsen and Robert Tappan Morris. Prior to joining Verizon, Mark was a frequent commentator in the media on issues related to information security, appearing on BBC, CBC, Fox News, CNN, NBC News, ABC News, the New York Times, the Wall Street Journal and many other outlets.

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