Despite Mitigation, Cyber Attacks, Rate Hikes to Continue in 2022

As dramatic as escalating ransomware attacks and rapidly climbing cyber insurance rates have been in 2021, both trends will continue to be a nuisance in 2022, according to an expert from Fitch Ratings.

“It is probably one of the bigger challenges that is not going to be solved in 2022,” said Christopher Grimes, a director in Fitch Ratings’ North American insurance rating group. “Experts around the world are trying their best to stay ahead, but it’s running uphill in this battle.”

One of the many drivers of cyber rate hikes: companies that were writing cyber cover, faced with the rapidly evolving cyber landscape, are pulling back due to a lack of expertise or marketplace anxiety, Grimes explained.

“Companies are trying to understand their aggregations to cyber risk and exclude it where necessary,” he said.

Grimes spoke as part of a prerecorded interview included in a Jan. 11, 2022, Carrier Management “Strategy Sessions” webinar. During the interview, he also addressed 2022 industry predictions for areas including rates and InsurTech trends.

Cyber Risk Education Continues

According to Grimes, insurers and their clients are continuing their efforts to educate employees about cyber risk. Fitch has engaged in its own internal efforts as well.

“Well, certainly, my company, we’ve had a number of phishing demos and stuff that we’ve experienced, and I imagine many corporations around the world are experiencing similar things, trying to understand and teach their employees that ‘here are the main things that hackers are trying to infect our company with, and let’s try to avoid doing those things,'” Grimes said. He added that insurers are doing the same, but cyber risks have been too unpredictable to successfully combat the problem through risk reduction lessons alone.

“We continue to see new areas attacked by different hackers, and areas that are looking for ways to exploit cybersecurity risks, [and so you] are only going to see losses continuing to rise,” Grimes said. “If there are areas in which companies can get ahead of this and try to figure out how to lessen the areas people can exploit, that will lessen some of the losses, [but] it’s certainly very difficult at this point.”