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2023 followed several turbulent years for the global cyber market; 2020 and 2021 were severely unprofitable for cyber insurers globally. Carriers were forced to put the brakes on; many paused writing new business or reduced limits and coverage for renewals as everyone grappled to understand what a good risk genuinely looked like.

This period witnessed a transition of underwriting methodology, not only regarding requirements of rate and retention but also the minimum controls and risk management needed to deem a risk insurable.

COVID-19 (and the global shift to a remote workforce) and the beginning of the ransomware epidemic were two main factors driving this. Combined, they highlighted cybersecurity vulnerabilities across the globe.

Insights

  • 2023 saw an increase in claims compared to 2022, with ransomware notifications remaining at the forefront
  • The average cost of a data breach reached an all-time high of USD 4.45 million in 20231
  • One of the most significant changes in 2023 was a softening approach toward the minimum-security controls insurers require to offer cover
  • The cyber market is in a precarious position currently; industry experts are anticipating another market hardening, and 2024 may witness a significant market shift

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Sources

1.Cost of a Data Breach Report 2023, IBM, July 2023

Disclaimer

The sole purpose of this report is to provide guidance on the issues covered. This report is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

Arthur J. Gallagher Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority®. Registered Office: Spectrum Building, 55, Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909.