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Cyber insurance prices are rising, driven by a surge in ransomware claims, Moody’s Investors Service Inc. said in a report Thursday.
Low double-digit rate increases across the board and steeper increases for loss-hit accounts are being reported by brokers, the ratings agency said in the report.
Insurers are also carefully monitoring new business and adding further underwriting criteria to address rising claims, Moody’s said.
“Some carriers are also reducing limits and raising attachment points, but for now, capacity in the market remains relatively stable,” the report said.
Unique difficulties in underwriting cyber insurance include a lack of uniform policy wording and the evolving nature of the risk which creates a shifting target for cyber models’ parameters, Moody’s said.
“A challenge for insurers is the potential for risk accumulations given that the same event can affect multiple policyholders across geographies and industries,” the report said.
It will take time for insurers to establish which of their customers had exposure to the Sunburst cyberattack perpetrated through SolarWinds software, Moody’s said.
“We expect underwriters will evaluate the scope and nature of the attack, adjust underwriting (for example, looking at vulnerabilities related to supply chains and third-party vendors), and help clients address susceptibilities to future attacks,” the report said.
Many commercial insurers and reinsurers are reducing their silent cyber exposure by shifting cyber risk to standalone policies or introducing cyber sublimits or exclusions in traditional policies, Moody’s said.
Insurers remain well-capitalized to absorb the increasing loss experience related to cyberattacks, the ratings agency said.
Cyber insurance premiums, which now total about $5 billion annually, will increase 20% to 30% per year on average in the near future, Standard & Poor’s Corp. says in a report.