Thanks to increased data breaches and security attacks, cyber insurance premiums increased by nearly 30 percent in the first quarter of 2022 compared to just the previous quarter, according to the Council of Insurance Agents & Brokers (CIAB). This specialty insurance has become more critical—and costly—than ever.

The 75 percent of worldwide organizations that purchase cyber insurance recognize that attacks and hacks are growing more sophisticated by the day, but remain concerned that premiums will continue to skyrocket and that cyber liability insurance will become more difficult to afford and even obtain. According to the FBI’s 2021 Internet Crime Report, more than 847,000 cyber incidents were reported last year alone, costing businesses over $18.7 billion.

What do platforms need to know about rising cyber insurance rates?

Understanding the state of the industry today can help inform your goals and practices going forward as you evaluate how best to serve your customers. The reality is that businesses of all sizes face significant challenges in protecting their digital assets and customers’ data from ever-advancing threats. This is a big part of why partners with trusted relationships with these small to mid-sized businesses can make a difference in extending insurance offerings to them.

It is essential to recognize that:

Premiums for cyber plans are rising across the board due to security-related increased demand. This is expected to stay the same in the short term.

More insurers are upping their underwriting guidelines to reduce overall risk. Companies must enhance their risk management practices, bolstering security and engaging in multi-factor authentication, for example.

Insurtechs may offer more tiered programs for industries and clients, including discounts for enhanced security measures.

Education matters more than ever. Brokers and agents can stay ahead by increasing their knowledge of cyber insurance requirements and programs. The more you know, the better prepared you will be as cyber insurance continues to evolve.

You will also want to communicate with customers, ensure they have appropriate coverage, and are prepared for a significant loss. Customers won’t necessarily have this education, but brokers and agents can fill in the gaps and the blanks with a focus on risk management.

While no business wants to hear this, being well-prepared for sticker shock will blunt some of the blow when the time for renewal comes. Ensure that your budgets for 2023 and beyond offer ample room for cyber insurance and IT-related costs.

If you have questions, Mulberri can help. An embedded platform that lets PEOs get frictionless cyber insurance for clients and efficiently connects the security ecosystem, Mulberri has developed a unique program that insures and helps small and medium businesses with cyber protection and monitoring.