Why are cyber premiums 'going gangbusters'?

'Carriers were not prepared' for ransomware-as-a-service

Tom Allen
clock • 3 min read

Five years ago carriers thought of cyber insurance as “stealing candy from babies” - but they were totally unprepared for how the market has changed.

A slide about cyber security

1992 mode

Premiums are following hockey stick-shape growth - "Going gang-busters," as Spencer called it - but carriers' loss ratios have followed a similar trend.

A good loss ratio - how much an insurer pays out per-dollar - is 15%, but in the cyber industry it's only ever gone down to 30%, in 2018. Today it sits above 60%.

Because of this, carriers are "starting to draw lines in the sand" in terms of when, why and how much they pay.

"Carriers are operating in 1992 mode," said Spencer, evaluating risk with questionnaires and "knee jerk" reactions to threats to their bottom line.

Nobody in the audience thought questionnaires were a good way to assess risk, according to an informal poll.

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