Cyber risk and insurance continue to dominate boardroom discussions with cyber criminals taking advantage of the confusion emanating from the COVID-19 pandemic.
Whilst capacity is still readily available to Australian organisations, markets are now looking at sustainability as a priority. The rapid impact of cyber incidents is giving pause to insurers, prompting reconsideration of how cyber insurance should be modelled, potentially moving away from the traditional long tail model and aligning more to short tail models due to the rapid manifestation of losses.
To provide a sustainable insurance solution, insurers need to realign their understanding of how rapidly their capacity may be consumed. When combined with the now frequent and devastating impacts of ransomware, insurers are considering how their premium pricing models need to be developed.
2020 will see an increase in cyber insurance higher than historical increases. Aon has seen premium and policy count increase year-on-year from 2012 of circa 30%, however 2020 is already trending at 50% growth compared to 2019 despite the economic uncertainty.
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