Mactavish, a UK independent outsourced insurance buyer and claims resolution expert, has conducted a survey and released a report that states that UK businesses are “facing soaring cyber insurance premiums caused by higher claim risks at a time of heightened exposure to cyber-attacks.”
A Reinsurance News article which covered the survey results declares that 56% of large businesses said the rising policy costs have contributed to cutbacks in other areas of the business.
It also reports that 77% of the companies surveyed believe they are covered against the risk of cyber-attacks (compared to 30% in 2018.)
In May 2022, Mactavish surveyed 202 risk professionals and senior managers in companies with over £5m turnover across all industry sectors.
“The findings of the report are particularly troubling at a time of rising premiums for cyber insurance and falling confidence that insurers would pay out in the event of an attack, with a quarter (25%) of all businesses surveyed stating they don’t think their insurer would pay out on a cyber claim.
The survey found that the main blockers for adoption are the cost of insurance (56%), the inadequacy of cover (30%) and distrust of claim pay-outs (25%), which could account for the 23% of companies who are still without cyber cover in 2022.
It would be ignorant to disregard the turbulent landscape the business world is confronted with in the face of the longest hard market on record, with insurers pumping up premiums and creating long-lasting hard conditions for policyholders. However, corporates must ensure they are protected against potential risks. The reality is that cyber-attacks are on the rise – 79% of respondents have been victim to one in the past 12 months – and they can truly devastate a company who does not have adequate, reliable protection.”
Contrary to the survey findings, we’re seeing signs of premiums stabilising and insurers competing to win business. So while there are parts of Bruce Hepburn’s commentary that we agree with (the blockers for insurance adoption, for example), there are larger chunks that we oppose.
Why would an insurer not pay out on a claim? An insurance policy is a legal contract, the terms of which are agreed upon between a client and an insurer, with a broker advising on how the contract should work. If a claim is made and covered under the contract, the insurer legally has to pay out. If a claim is denied, it’s because there is a discrepancy in the cover or contract. At Assured, we make it our business to be utterly candid about precisely what is and isn’t covered in a policy before it has been purchased; that way, clients have accurate expectations.
It’s important to understand that cyber insurance is about so much more than just the payout. It’s also about support. For example, did you know that most insurers offer the first 72 hours of a cyber incident outside of the policy limit, meaning there is no excess to pay and no need to ‘log a formal incident’?
As for the cost of cyber insurance, the fee represents the risk. If cyber weren’t such a considerable risk, it wouldn’t be such a valuable product. Let’s flip the ‘23% of businesses are without cyber cover’ stat; that means 77% of companies are insured against cyber attacks. This is an incredible statistic demonstrating that the cyber insurance model is working.
Hepburn’s use of the word ‘turbulent’ suggests that the cyber insurance market has been unsteady. In fact, it has reacted so as to remain buoyant so it can adequately protect businesses buying cover. Rate increases weren’t the cause of a ‘soft market’ hardening. Instead, they served as an industry correction as insurers adjusted their rates according to necessity.