Despite the growing need for this product, cyber insurance coverage can be hard to obtain for some types of businesses.

Aon brokers shared this finding in a report on commercial lines underwriting in Canada at mid-year 2021.

In the cyber insurance segment, insurers’ profitability has been impacted by the rise in ransomware attacks, Aon notes in its report. The effects of the SolarWinds attacks, which began in December 2020, were quickly felt, the brokers say.

These events have “led to significant rate increases in both public and private organizations, hitting municipal and educational risks the hardest,” the report points out.

Beginning in mid-2020, the pressure to increase rates from insurers that offer excess coverage has intensified as rates for primary capacity increased significantly, Aon adds. In fact, this excess segment was historically underpriced, the report says.

Insurers’ retention limits are also rising, Aon brokers say, and some carriers are looking to co-insurance.

Aon also singled out industries that can expect higher rates in cyber insurance. They include retailers, universities, financial institutions, healthcare providers and municipalities.

A growing danger  

Aon highlighted another type of cyber risk: social engineering fraud. These fraudsters trick a company employee into depositing funds into an account by impersonating someone else. This problem “continues to be an area of concern,” the Aon report states.

Social engineering fraud poses a great risk to companies and their directors and officers alike, especially given the perpetrators’ increasingly sophisticated schemes.

“Social engineering fraud coverage is now being provided by certain domestic and London insurers under cyber insurance policies. While a cyber policy would not typically respond to cover direct financial loss arising out of a cyber breach, the social engineering fraud endorsement makes an exception where the financial loss results from an executive, vendor, or client impersonation scam, including situations of push payment fraud. The coverage is typically sublimited and may not be as broad as the social engineering coverage provided under commercial crime insurance policies,” the brokers explain.

Protecting high net worth clients  

Hub underlines the importance of protecting high net worth (HNW) clients from cyber risk. “HNW individuals and their families are often in the public eye. The problem often starts with their Millennial or Gen Z children who may have a social media presence that can expose them -- and their parents—to real threats. Because personal information on social media is more accessible to the masses than ever before,” Hub brokers said in a report filed earlier this year.

More than one quarter of high-net-worth individuals worldwide, along with their family businesses, totalling US$1.1 billion in assets, have been subject to cyberattacks, Hub mentions in its report. “Through phishing, malware and social engineering, cyber criminals are searching for bank and investment information, personal emails, Social Insurance Number, dates of birth, passport numbers and even personal photos and videos,” Hub brokers warn.

Learn more