The digital pandemic - ransomware attacks worldwide went up by 170%

8 July 2021 — Daniela GHETU
The digital pandemic - ransomware attacks worldwide went up by 170%
"From a cyber perspective, only two types of companies exist: those that have been hacked and those that will be hacked," reads a recent Hiscox report which also calls ransomware attacks a "digital pandemic" with which 2020/21 will be for ever associated, as well as with the Covid-19 pandemics.

"The frequency and severity of ransomware incidents have grown considerably over the last year, with cyber criminals deploying new tactics and techniques to achieve one simple goal: to make money." The report's authors say. In fact, statistical data show that ransomware has become the predominant cyber threat confronting businesses.

• Number of ransomware attacks worldwide went up by 170% at 4Q20 compared to 1Q19

• Average ransomware costs worldwide increased by 145% in 2021 compared to 2020, with a peak for the USA, where the average ransomware costs quadrupled 1Q21 vs. FY2019.

The accelerated digitalization of lots of businesses driven by the Covid-19 crisis has triggered an explosive development also on the criminal side of the cyber world, appreciated as the most impactful ever. Overall, the already complicated cyber risk landscape became even more complex. With the prospect of risk aggregation and systemic events ever present, the cyber insurance business is currently one with highest growth rates, but also with the most fluid risk landscape.

"Catastrophic cyber presents challenges for an insurance industry built on underwriting mostly geographically contained and uncorrelated (physical) risks, and being guided in the process by historical loss data to help manage aggregations, estimate potential losses and price policies. Business interruption is one of the more dominant exposures associated with catastrophic cyber, and COVID-19 has provided a painful illustration of how non-affirmative coverages can surprise and spiral for global, systemic events," states the report. As such, "The cyber insurance market is undergoing one of its most transformative changes since the first cyber policy was underwritten some 20 years ago."

However, despite all challenging issues, the business volume on the cyber insurance side increased at a 22% CAGR for years, since 2016 and is predicted to continue at a similar pace also in the following years, reaching by the 2025 to over USD 20 billion in GWP globally. On the other side, given the surge in cyber attacks and the increasing claims costs, the cyber insurance market is obviously hardening. According to Howden's report, that global cyber insurance pricing has increased, in average, by 32% y-o-y in June 2021, on the back of a 50% rise since data tracking began.

Most of the executives interviewed by Howden (53%-54%) believe that the business world will continue to face three trends established throughout 2020/21: increase in remote working / collaboration; increase in cloud migration; increase in data security spending. Together with significantly growing volume of services offered in a digital manner and digital interaction means with customers, all these trends are converting in a higher exposure and vulnerability to cyber-attacks, especially considering that going digital was a rushed and somehow ill-prepared move for many business trying to survive the Covid crisis.

The full Howden report CYBER INSURANCE: A HARD RESET is available here.