A.M. Best reported that the top “cyber insurance writers have shifted away from writing packaged policies to standalone coverage by nearly a 70-30 split on the $1.3 billion of direct premiums written in 2016,…and this shift mainly results from many insurance companies realizing that tailored coverage forms addressing cyber liability risks separate from traditional insurance products, such as commercial general liability, business interruption or directors and officers policies, were more efficient and effective.”  The June 26, 2017 report entitled “A.M. Best Special Report: U.S. Cyber Insurance Market Topped $1 Billion in 2016; More Writers Move to Standalone Policies” included these comments:

Overall, cyber insurance for the majority of this universe of companies was profitable, and the direct loss ratio decreased by 4.5 percentage points to 46.9% in 2016 from 51.4% in 2015.

The decline in direct loss ratio for 2016 is partially attributed to the majority of reported cyber-attacks being related to ransomware heists.

In almost all ransomware cases, the losses were well below the deductible and a simple backup recovery resolved and remedied any negative long-term effect of the attacks.

Additionally, due to the general language of packaged polices, insurance companies have faced expensive litigation in cases where such policies did not include exclusory language.

Many businesses have not purchased cyber insurance and need to investigate sooner rather than later.