Category Archives: Cyber Risk

Despite Warnings,
Weak Password Policies Still Invite Cybercrime

By Max Dorfman, Research Writer, Triple-I

It’s Cyber Security 101: Multi-factor authentication and hard-to-crack passwords are table stakes for preventing incursions.

Nevertheless, “Password,” “12345”, and “Qwerty123” are among the most commonly found passwords leaked on the dark web by hackers, according to mobile security firm Lookout. And, despite the amount of attention the issue receives, the situation does not appear to be improving.

A survey by EY, a consulting firm based in the United Kingdom, found that only 48 percent of government and public sector respondents said they are “very confident in their ability to use strong passwords at work.” The problem is exemplified by a recent study by the U.S. Office of Inspector General – part of the Department of the Interior (DOI), the agency responsible for managing federal lands and natural resources.

Hacking DOI, it turns out, is relatively easy.

In fewer than two hours – and spending only $15,000 – the Inspector General’s Office was able to procure “clear-text” (non-encrypted) passwords for 16 percent of user accounts. In total, 18,174 of 85,944 – 21 percent of active user passwords – were hacked, including 288 accounts with elevated privileges and 362 accounts of senior U.S. government employees.

Much of this issue, according to the report, stems from a lack of multifactor authentication, as well as password complexity requirements that allowed unrelated staff to use the same weak passwords. The Inspector General’s Office found that:

  • DOI did not consistently implement multifactor authentication;
  • Password complexity requirements were outdated and ineffective; and
  • The department did not timely disable inactive accounts or enforce password age limits, which left more than 6,000 additional active accounts vulnerable to attack.

The most commonly reused password was used on 478 unique active accounts. Investigators found that five of the 10 most-reused passwords at DOI included a variation of “password” combined with “1234”.

Simple passwords make hacking easy

With the average person having over 100 different online accounts with passwords, reusing passwords is understandable – but simple passwords make it easy for hackers to access personal data and accounts.

“Compromised, weak and reused passwords still account for the majority of hacking-related data breaches and are one of the top risk issues for most enterprises” said Gaurav Banga, CEO and founder of cybersecurity firm Balbix. In 2020, Balbix found that 99 percent of enterprise users recycle passwords across work accounts or between work and personal accounts.

A growing peril

“The cost of ransomware attacks has increased as criminals have targeted larger companies, supply chains and critical infrastructure,” Allianz says in its Allianz’s 2023 Risk Barometer. “In April 2022, an attack impacted around 30 institutions of the government of Costa Rica, crippling the territory for two months.”

The global insurer goes on to say, “Double and triple extortion attacks are now the norm…. Sensitive data is increasingly stolen and used as a leverage for extortion demands to business partners, suppliers, or customers.”

Part of this growth is due to the rise of “ransomware as a service” – a subscription-based business model that enables affiliates to use existing ransomware tools to execute attacks. Based on the “software as a service” model, it helps bad actors attack their targets without having to know how to code or hire unscrupulous programmers.

Shifting targets

Michael Menapace, an insurance attorney with Wiggin and Dana LLP and a Triple-I Non-resident Scholar, told attendees at Triple-I’s 2022 Joint Industry Forum that “ransomware as a business model remains alive and well.”

What has changed in recent years, he said, is that “where bad actors would encrypt your systems and extract a ransom to give you back your data, now they will exfiltrate your data and threaten to go public with it.”

The types of targets also have changed, Menapace said, with an increased focus on “softer targets—in particular, municipalities” that often don’t have the personnel or finances to maintain the same cyber hygiene as large corporate entities.

Organizations and individuals must take the threat of cyberattacks seriously and do as much as possible to reduce their risk. Improved cyber hygiene policies and practices are a necessary first step.

JIF 2022: Cyber Criminals Shift to Softer Targets And Reputation Threats

Photo credit: Don Pollard

Cyber criminals continued to shift their tactics and adapt their techniques in 2022, according to experts speaking at the Triple-I Joint Industry Forum (JIF) last week.

Ransomware as a business model” remains alive and well, said Michael Menapace, an insurance attorney with the law firm Wiggin and Dana LLP and a Triple-I Non-resident Scholar. What has changed in recent years is that “where the bad actors would encrypt your systems and extract a ransom to give you back your data, now they will exfiltrate your data and threaten to go public with it.”

The types of targets also have changed, Menapace said, with an increased focus on “softer targets – in particular, municipalities” that often don’t have the personnel or finances to maintain the same cyber hygiene as large corporate entities.

Theresa Le, Chief Claims Officer for Cowbell Cyber, concurred with Menapace’s assessment, noting an increased tendency of cyber criminals to contact organizations’ customers or leaders as “a pressure point” for the organization to pay the ransom in order to avoid reputational harm.  

“Threat actors are focusing on the quality of the data that they can extract while they’re ‘in the house’,” Le said, “so it’s not just stealing Social Security numbers or other information they can sell on the Dark Web, as it was a few years ago. It’s really much more thoughtful and focused.”

Scott Shackelford, professor of Business Law and Ethics at Indiana University’s Kelley School of Business, reinforced Menapace’s and Le’s observations about the increased sophistication and adaptability of cyber criminals by talking about state-sponsored incursions.

“It’s not just the North Koreas of the world,” he said, adding that “a growing cadre of nation-states” are launching attacks “not just on large corporations but increasingly small and medium-sized businesses, even local governments.”

“We founded a cyber security clinic two years ago,” Schackelford said, “and the number one request we get from local government and small utilities has to do with insurance coverage. There’s a lot of need out there for better information.”

Shackelford emphasized the continuing evolution of the Internet of Things (IoT) as an “attack surface.” In the new pandemic-driven work-from-home environment, he said, “What counts as a covered computer device for some of these policies has led to litigation and remains a big vulnerability that we’ve only just begun to wrap our minds around.”

The conversation, moderated by Frank Tomasello, executive director for The Institutes Griffith Insurance Education Foundation, ranged across topics that included:

  • Deep-fake technology;
  • The importance aligning insurance pricing with the risk – and educating policyholders on how to get a better price by becoming a better risk;
  • How threats differ for different-sized organizations and for individuals; and
  • The need for better data and information sharing around cyberattacks and trends.

Learn More:

Triple-I “State of Cyber Risk” Issues Brief

Piracy Incidents Decline, But Horizon Isn’t Clear

Maritime piracy in the first half of 2022 is at its lowest level since 1994, the International Maritime Bureau (IMB) says, with 58 incidents, down from 68 for the same period last year. Nevertheless, the organization cautions against complacency.

For the full year 2020, IMB listed 195 actual and attempted attacks, up from 162 in 2019. The COVID-19 pandemic may have played a role in that rise in pirate activity – as it is tied to underlying social, political, and economic problems – and 2022 may represent the start of a return of a downward trend.

Source: International Chamber of Commerce/International Maritime Bureau (IMB)

Many people outside the maritime and insurance industries don’t realize that piracy remains a costly peril in the 21st century. Global insurer Zurich estimates the annual cost of piracy to the global economy at $12 billion a year.  In its 2022 Safety and Shipping Review, global insurer Allianz reports that piracy comes behind machinery damage or failure, collision, and contact, in terms of number of loss-causing incidents globally – and that total losses have fallen 57 percent over the past decade.

However, the shipping industry is vulnerable to disruptions and, as Allianz points out, has been affected on multiple fronts by Russia’s invasion of Ukraine: from loss of life and vessels in the Black Sea and disrupted trade to challenges to day-to-day operations that affect crews, cost and availability of fuel, and the growing for cyber risk.

“To date, the biggest impact has been on vessels operating in the Black Sea and/or trading with Russia,” Allianz says. “At the start of the conflict, approximately 2,000 seafarers were stranded aboard vessels in Ukranian ports. Trapped crews faced the constant threat of attacks, with little access to food or medical supplies, and a number have been killed.”

According to a recent industry survey, Allianz says, 44 percent of maritime professionals reported that their organization has been the subject of a cyber-attack in the last three years. Accumulations of cargo exposures at mega ports have been rising – and, with ports increasingly reliant on technology, an outage or cyber-attack could effectively close a port.

In February 2022, India’s busiest container port was hit by a ransomware attack, following incidents at U.S. and South African ports in recent years.

A third of organizations surveyed by Allianz said they don’t conduct regular cyber security training or have a cyber-response plan.

Complex Risks in a Complicated World:
Are Federal Government “Backstops” The Answer?

Two U.S. agencies have agreed to explore the potential need for a federal mechanism – analogous to the one put into place for terrorism insurance after the 9/11 attacks – to address the growing cybersecurity threat to critical infrastructure. The perceived need to do so speaks to the growing complexity and interrelatedness of this and other risks facing governments, businesses, and communities today.

The Government Accountability Office (GAO), in a recently published report, recommended that Treasury’s Federal Insurance Office (FIO) and Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) take this action.  It acknowledges that FIO and CISA have “taken steps to understand the financial implications of growing cybersecurity risks” – but those actions have not included the possible need for a federal insurance mechanism.

“Cyber insurance and the Terrorism Risk Insurance Program (TRIP)—the government backstop for losses from terrorism—are both limited in their ability to cover potentially catastrophic losses from systemic cyberattacks,” the GAO report says. “Cyber insurance can offset costs from some of the most common cyber risks, such as data breaches and ransomware. However, private insurers have been taking steps to limit their potential losses from systemic cyber events.”

Insurers are excluding coverage for losses from cyber warfare and infrastructure outages, the report notes, and cyberattacks may not meet TRIP’s criteria to be certified as terrorism.

As we’ve previously reported, some in the national security world have compared U.S. cybersecurity preparedness today to its readiness for terrorist acts prior to the 9/11. Before Sept. 11, 2001, terrorism coverage was included in most commercial property policies as a “silent” peril – not specifically excluded and, therefore, covered. Afterward, insurers began excluding terrorist acts from policies, and the U.S. government established the Terrorism Risk Insurance Act (TRIA) to stabilize the market.  TRIA created TRIP as a temporary system of shared public and private compensation for certain insured losses resulting from a certified act of terrorism.

Treasury administers the program, which has to be periodically reauthorized. TRIP has been renewed four times – in 2005, 2007, 2015, and 2019 – and the backstop has never yet been triggered.

The GAO recommendation that a similar solution be considered for cyber risk highlights the potential insufficiency of traditional risk-transfer products to address increasingly complex and costly threats. Alongside terrorism and cyber, we’ve experienced – and continue to experience – the myriad perils of pandemic, with its assorted impacts on the global supply chain, driving behavior, business interruption and remote work practices, and the economy. Even if those challenges moderate, we will continue to face what is perhaps the most entangled set of risks on the planet: those associated with climate and extreme weather.

One only has to look as far as Florida, where the insurance market is on the brink of failure as writers of homeowners coverage begin to go into receivership and global reinsurers reassess their appetite for providing capacity in that hurricane-prone, fraud- and litigation-plagued state. Or, one could follow the wildfire activity in recent years; or flood loss trends, increasingly creating problems inland, where flood insurance purchase rates tend to be lower than in coastal areas; or insured losses due to severe convective storms, which have been rising in parallel with losses from hurricanes.

Fortunately, many states are taking steps – often with partners, including the insurance industry – to anticipate and mitigate such risks. Much is being done, but much work remains to change behaviors, best practices, and public policies in ways that will reduce risks and improve availability and affordability of coverage.

The Battle Against Deepfake Threats

By Max Dorfman, Research Writer, Triple-I

Some good news on the deepfake front: Computer scientists at the University of California have been able to detect manipulated facial expressions in deepfake videos with higher accuracy than current state-of-the-art methods.

Deepfakes are intricate forgeries of an image, video, or audio recording. They’ve existed for several years, and versions exist in social media apps, like Snapchat, which has face-changing filters. However, cybercriminals have begun to use them to impersonate celebrities and executives that create the potential for more damage from fraudulent claims and other forms of manipulation.

Deepfakes also have the dangerous potential to be used to in phishing attempts to manipulate employees to allow access to sensitive documents or passwords. As we previously reported, deepfakes present a real challenge for businesses, including insurers.

Are we prepared?

A recent study by Attestiv, which uses artificial intelligence and blockchain technology to detect and prevent fraud, surveyed U.S.-based business professionals concerning the risks to their businesses connected to synthetic or manipulated digital media. More than 80 percent of respondents recognized that deepfakes presented a threat to their organization, with the top three concerns being reputational threats, IT threats, and fraud threats.

Another study, conducted by a CyberCube, a cybersecurity and technology which specializes in insurance, found that the melding of domestic and business IT systems created by the pandemic, combined with the increasing use of online platforms, is making social engineering easier for criminals.

“As the availability of personal information increases online, criminals are investing in technology to exploit this trend,” said Darren Thomson, CyberCube’s head of cyber security strategy. “New and emerging social engineering techniques like deepfake video and audio will fundamentally change the cyber threat landscape and are becoming both technically feasible and economically viable for criminal organizations of all sizes.”

What insurers are doing

Deepfakes could facilitate the filing fraudulent claims, creation of counterfeit inspection reports, and possibly faking assets or the condition of assets that are not real. For example, a deepfake could conjure images of damage from a nearby hurricane or tornado or create a non-existent luxury watch that was insured and then lost. For an industry that already suffers from $80 billion in fraudulent claims, the threat looms large.

Insurers could use automated deepfake protection as a potential solution to protect against this novel mechanism for fraud. Yet, questions remain about how it can be applied into existing procedures for filing claims. Self-service driven insurance is particularly vulnerable to manipulated or fake media. Insurers also need to deliberate the possibility of deep fake technology to create large losses if these technologies were used to destabilize political systems or financial markets.

AI and rules-based models to identify deepfakes in all digital media remains a potential solution, as does digital authentication of photos or videos at the time of capture to “tamper-proof” the media at the point of capture, preventing the insured from uploading their own photos. Using a blockchain or unalterable ledger also might help.

As Michael Lewis, CEO at Claim Technology, states, “Running anti-virus on incoming attachments is non-negotiable. Shouldn’t the same apply to running counter-fraud checks on every image and document?”

The research results at UC Riverside may offer the beginnings of a solution, but as one Amit Roy-Chowdhury, one of the co-authors put it: “What makes the deepfake research area more challenging is the competition between the creation and detection and prevention of deepfakes which will become increasingly fierce in the future. With more advances in generative models, deepfakes will be easier to synthesize and harder to distinguish from real.”

Cyber Premiums Nearly Doubled as Losses Fell

By Max Dorfman, Research Writer, Triple-I

Direct written premiums for cyber policies grew sharply in 2021 from 2020, spurred by claims activity and cyber incidents. According to a recent analysis by S&P Global Market Intelligence, direct written premiums nearly doubled, to approximately $3.15 billion in 2021, from $1.64 billion the previous year. Direct written premiums for packaged cyber insurance rose approximately 48 percent, to $1.68 billion in 2021 from $1.14 billion in 2020. 

The average loss ratio for stand-alone policies decreased to 65.4 percent in 2021, from 72.5 percent in 2020, while they significantly grew premium. Analysts believe this might be a sign that insurers are becoming more disciplined and conservative in their cyber underwriting. Still, Fitch Ratings analysts noted that cyber insurance is the fastest-growing segment for U.S. property and casualty insurers, with prices increasing at “considerably higher” speed than other commercial business lines.

Cybercrime is increasing

According to the FBI’s Internet Crime Complaint Center (IC3) 2021 Internet Crime Report, the department had 3,729 ransomware complaints, with over $49.2 million of adjusted losses. In total, there was $6.9 billion in losses coinciding with more than 2,300 average complaints daily. The most common complaint was phishing scams, demonstrating a trend that has continued for some time.

Indeed, several data points demonstrate the increasingly dire situations organizations face when it comes to cyberattacks, and the need for businesses to become more vigilant. These include:

Challenges await

According to one analysis by Fortune Business Insights, the compound annual growth rate of cyber insurance could increase by 25.3 percent from 2021 to 2028, with the market growing to $36.85 billion.

However, Tom Johansmeyer, a cyber insurance expert, told Harvard Business Review in March 2022, “Cyber insurance is harder for companies to find than it was a year ago – and it’s likely going to get harder. While cyber insurance is becoming more of a must-have for businesses, the explosion of ransomware and cyberattacks means it’s also becoming a less enticing business for insurers.”

Organizations should combine these policies with a strong cyber security plan to fully safeguard against the possibility and consequences of a breach.

Learn More:

Triple-I “State of the Risk” Issues Brief on Cyber

Cyberattacks Growing in Frequency, Severity, and Complexity

As Cybercriminals Act More Like Businesses, Insurers Need to Think More Like Criminals

Cyberattacks Growing
in Frequency, Severity, And Complexity

By Max Dorfman, Research Writer, Triple-I (04/29/2022)

Several recent reports quantify the growing risk and cost of cyber attacks in 2021.

Willis Towers Watson PLC, a multinational risk-management, insurance brokerage, and advisory company, and global law firm Clyde & Co, surveyed directors and risk managers based in more than 40 countries around the world. They found that 65 percent regard cybercrime as “the most significant risk” facing directors and officers. Data loss and cyber extortion followed, at 63 percent and 59 percent, respectively.

In 2021, there were 623.3 million cyberattacks globally, with U.S. cyberattacks rising by 98 percent, according to cybersecurity firm SonicWall. Almost every threat increased in 2021, particularly ransomware, encrypted threats, Internet of Things (IoT) malware, and cryptojacking, in which a criminal uses a victim’s computing power to generate cryptocurrency.

The frequency of ransomware attacks alone rose by 105 percent globally in 2021, SonicWall says,  making them the most frequent type of cyberattack on record. The State of Ransomware 2022 by Sophos, a security software and hardware company, found that 66 percent of organizations surveyed were attacked by ransomware in 2021, rising from 37 percent in 2020. Ransomware payments often trended higher, with 11 percent of organizations stating that they paid ransoms of $1 million or more, up from 4 percent in 2020. Additionally, 46 percent of organizations that had data encrypted in a ransomware attack paid the ransom.

The 2021 Software Supply Chain Security Report by Argon, an Aqua Security company, underscores the main areas of criminal focus, including: “open-source vulnerabilities and poisoning; code integrity issues; and exploiting the software supply chain process and supplier trust to distribute malware or backdoors.”

According to the Argon report, cybercriminals often use these methods to extort victims:

  • Encryption: Victims pay to regain access to scrambled data and compromised computer systems that stop working because key files are encrypted.
  • Data Theft: Hackers release sensitive information if a ransom is not paid.
  • Denial of Service (DoS): Ransomware gangs launch denial of service attacks that shut down a victim’s public websites.
  • Harassment: Cybercriminals contact customers, business partners, employees, and media to tell them the organization was hacked.

“The number of attacks over the past year and the widespread impact of a single attack highlights the massive challenge that application security teams are facing,” said Eran Orzel, a senior director at Argon.

Cyber insurers work toward protecting businesses

Cyber insurance remains an important investment for many companies, particularly as cyberattacks continue to wreak havoc across industries. Investing in cyber insurance can help an organization recover from an attack, with cyber insurance companies often helping to recover data, repair damaged devices, protect a company from civil lawsuits, and fixing any reputational damage sustained during an attack.

However, the first line of defense is creating a robust cybersecurity system, training employees on how to identify a potential attack, encrypting company data, and enabling antivirus protection. With only half of businesses reporting a consistent encryption strategy, and the cost of data breaches continuing to rise, organizations must do more to protect themselves and their customers.

Study Highlights Cost
of Data Breaches
in a Remote-Work World

By Max Dorfman, Research Writer, Triple-I (04/27/2022)

A recent study by IBM and the Ponemon Institute quantifies the rising cost of data breaches as workers moved to remote environments during the coronavirus pandemic.

According to the report, an average data breach in 2021 cost $4.24 million – up from $3.86 million in 2020. However, where remote work was a factor in causing the breach, the cost increased by $1.07 million. At organizations with 81-100 percent of employees working remotely, the total average cost was $5.54 million.

To combat the risks associated the rise of remote work, the study highlights the importance of security artificial intelligence (AI) and automation fully deployed – a process by which security technologies are enabled to supplement or substitute human intervention in the identification and containment of incidents and intrusion efforts.

Indeed, organizations with fully deployed security AI/automation saw the average cost of a data breach decrease to $2.90 million. The duration of the breach was also substantially lower, taking an average of 184 days to identify the breach and 63 days to contain the breach, as opposed to an average of 239 days to identify the breach and 85 days to contain the breach for organizations without these technologies.

Organizations continue to struggle with breaches

In 2021 and 2022, several high-profile data breaches have illustrated the major risks cyberattacks represent. This includes a January 2022 attack 483 users’ wallets on Crypto.com, which resulted in the loss of $18 million in Bitcoin and $15 million in Ethereum and other cryptocurrencies.

In February, the International Committee of the Red Cross (ICRC) was targeted by a cyberattack that resulted in the hackers accessing personal information of more than 515,000 people being helped by a humanitarian program, with the intruders maintaining access to ICRC’s servers for 70 days after the initial breach.

And in April, an SEC filing revealed that the company Block, which owns Cash App, had been breached by a former employee in December of 2021. This leak included customers’ names, brokerage account numbers, portfolio value, and stock trading activity for over 8 million U.S. users.

Insurers play a key role in helping organizations

The increasing frequency and seriousness of cyberattacks has led more organizations to purchase cyber insurance, with 47 percent of insurance clients using this coverage in 2020, up from 26 percent in 2016, according to the U.S. Government Accountability Office. This shift includes insurers offering more policies specific to cyber risk, instead of including this risk in packages with other coverage.

The insurance industry offers first-party coverage – which typically provides financial assistance to help an insured business with recovery costs, as well as cybersecurity liability, which safeguards a business if a third party files a lawsuit against the policyholder for damages as a result of a cyber incident.

A third option, technology errors and omissions coverage, can safeguard small businesses that offer technology services when cybersecurity insurance doesn’t offer coverage. This kind of coverage is triggered if a business’s product or service results in a cyber incident that involves a third party directly.

Still, the primary focus for organizations looking to defend themselves from cyberattacks is implementing a rigorous cyber defense system.  

Cyber Tops Allianz 2022 Survey of Business Risks

By Max Dorfman, Research Writer, Triple-I

Cyber incidents are the top threat to businesses, according to the latest Allianz Risk Barometer survey, up from third place in 2021. This result follows several significant data breaches and hacks last year, including the Colonial Pipeline ransomware attack, which caused a six-day shutdown and cost the company $4.4 million to regain access to its systems.

Business interruption fell to the second most important concern in a year marked by the continued presence of the coronavirus pandemic, cyberattacks, and natural catastrophes. Still, the report notes that the pandemic “has exposed the fragility and complexity of modern supply chains and how multiple events can come together to cause problems, raising awareness of the need for greater resilience and transparency.”

Natural catastrophe risk ranks third on the list – a jump from sixth in 2021. Global insured catastrophe losses increased to $112 billion in 2021, the fourth highest on record, according to Swiss Re.

While cyber is ranked as a more immediate threat to business than climate change, the report says these two perils are “linked by the fact that two of the most significant impacts expected from changes in legislation and regulation (the fifth top risk) in 2022 will be around big tech and sustainability.”

Pandemic outbreak fell to fourth place for 2022, with many companies comfortable that they are now better prepared for the consequences of these occurrences. According to the report, 80 percent of respondents believe they are “adequately” or “well” prepared.

The 11th annual report was developed from a late 2021 survey of 2,650 risk management experts from 89 countries and territories, including Allianz customers, brokers, industry trade organizations, risk consultants, and underwriters, with a focus on large- and small to mid-size companies.

As Cybercriminals Act More Like Businesses, Insurers Must Think
More Like Criminals

Credit for all photos in this post: Don Pollard

Cybersecurity is no longer an emerging risk but a clear and present one for organizations of all sizes, panelists on a panel at Triple-I’s Joint Industry Forum (JIF) said. This is due in large part to the fact that cybercriminals are increasingly thinking and behaving like businesspeople.

“We’ve seen a large increase in ransomware attacks for the sensible economic reason that they are lucrative,” said Milliman managing director Chris Beck. Cybercriminals also are becoming more sophisticated, adapting their techniques to every move insurers, insureds, and regulators make in response to the latest attack trends. “Because this is a lucrative area for cyber bad actors to be in, specialization is happening. The people behind these attacks are becoming better at their jobs.”

As a result, the challenges facing insurers and the customers are increasing and becoming more complex and costly. Cyber insurance purchase rates reflect the growing awareness of this risk, with one global insurance broker finding that the percentage of its clients who purchased this coverage rose from 26 percent in 2016 to 47 percent in 2020, the U.S. Government Accountability Office (GAO) stated in a May 2021 report.

Panel moderator Dale Porfilio, Triple-I’s chief insurance officer, asked whether cyber is even an insurable risk for the private market. Panelist Paul Miskovich, global business leader for the Pango Group, said cyber insurance has been profitable almost every year for most insurers. Most cyber risk has been managed through more controls in underwriting, changes in cybersecurity tools, and modifications in IT maintenance for employees, he said.

By 2026, projections indicate insurers will be writing $28 billion annually in gross written premium for cyber insurance, according to Miskovich. He said he believes all the pieces are in place for insurers to adapt to the challenges presented by cyber and that part of the industry’s evolution will rely on recruiting new talent.

“I think the first step is bringing more young people into the industry who are more facile with technology,” he said. “Where insurance companies can’t move fast enough, we need partnerships with managing general agents, with technology and data analytics, who are going to bring in data and new information.”

“Reinsurers are in the game,” said Catherine Mulligan, Aon’s global head of cyber, stressing that reinsurers have been doing a lot of work to advance their understanding of cyber issues. “The attack vectors have largely remained unchanged over the last few years, and that’s good news because underwriters can pay more attention to those particular exposures and can close that gap in cybersecurity.”

Mulligan said reinsurers are committed to the cyber insurance space and believe it is insurable. “Let’s just keep refining our understanding of the risk,” she said.

When thinking about the future, Milliman’s Beck stressed the importance of understanding the business-driven logic of the cybercriminals.

If, for example, “insurance contracts will not pay if the insured pays the ransom, the logic for the bad actor is, ‘I need to come up with a ransom schema that I’m still making money’,” but the insured can still pay without using the insurance contract.

This could lead to a scenario in which the ransom demands become smaller, but the frequency of attacks increases. Under such circumstances, insurers might have to respond to demand for a new kind of product.

Learn More about Cyber Risk on the Triple-I Blog

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Cyber Insurance’s “Perfect Storm”

“Silent” Echoes of 9/11 in Today’s Management of Cyber-Related Risks

Brokers, Policyholders Need Greater Clarity on Cyber Coverage

Cyber Risk Gets Real, Demands New Approaches