Cyber insurance remains a critical tool for managing risk, but it comes with its own set of challenges. Recent insights highlight three key recommendations for improving the effectiveness of cyber insurance policies: insurers should clarify security expectations, provide actionable lists of required practices, and offer incentives for adopting new standards. The key to reducing risk and minimizing loss lies in both providers and purchasers working together.
Warren Buffett’s warning highlights growing risk of cyber insurance losses The United States cyber insurance industry continues to see strong profits, according to Fitch Ratings. Average premium increases, meanwhile, have moderated over the last three years: While 2021 saw a 34% jump in premium pricing and costs rose 15% in 2022, increases were under 1% in 2023. As noted by the Fitch Ratings report, “segment underwriting profitability at current levels is unsustainable as cyber insurance pricing is likely to remain flat or down going forward.” While this is good news for enterprises looking to limit the impact of cybersecurity incidents, cyber insurance providers are concerned about the uncertain costs that come with fully covering companies if networks are breached or data is compromised. The result? Words of warning from Warren Buffett: “You may get an aggregation of risks that you never dreamt of, and maybe worse than some earthquake happening someplace.” Berkshire Hathaway is the sixth-largest provider of cyber insurance policies in the United States. And while current policies are profitable, Berkshire’s top executive Ajit Jain says that total cyber losses are often hard to pin down. “The aggregation potential can be huge,” he says. “And not being able to have a worst-case gap on it is what scares us.” https://lnkd.in/dvJQMxnm #cybersecurity #insurance #risk #losses #WarrenBuffet
