The Insurance Bureau of Canada (IBC) has reported significant growth in the country’s cyber insurance market, thanks in part to heightened awareness of cyber threats and enhanced underwriting controls.
IBC’s new report indicates that cyber liability premiums in Canada have surged from $18 million in 2015 to $550 million in 2023, though the numbers may not fully capture the market’s true size.
Despite the surge, the frequency and severity of claims have outstripped premium growth. Azimi noted that financial results reveal that, from 2019 to 2023, insurers had a combined ratio averaging 153%, meaning they paid out $1.53 in claims and operating expenses for every dollar earned in premiums.
“The cyber insurance market, though, has been stabilizing over the last couple of years due to insurers gaining a better understanding of cyber risk, improving underwriting standards, and providing more tailored products,” IBC catastrophic risk policy manager Mahan Azimi pointed out. “The market has also witnessed increased capital flow, which invites more competition and leads to better coverage terms.”
Additionally, insurers are taking steps to clarify coverage areas, address exposures in policies not originally intended for cyber risks, refine policy language, and exclude cyber warfare and state-sponsored attacks from coverage. Azimi explained that improved underwriting now demands rigorous cybersecurity measures as part of a mature approach to risk management.
Nonetheless, data breaches are becoming increasingly costly. Azimi highlighted that in 2023, the average cost of a data breach in Canada reached $6.9 million, with global cybercrime and insecurity remaining top concerns for industry leaders. The first half of 2023 saw a rise in ransomware attacks as cybercriminals exploited new tactics and vulnerabilities. Artificial intelligence, in particular, has made these attacks more efficient and difficult to detect.
Through the 2024 Budget and its Enterprise Cyber Security Strategy, the Canadian government is bolstering the country’s cybersecurity posture, aiming to improve defence and resilience.
Azimi emphasized that IBC is committed to supporting businesses in boosting their cyber resilience and understanding through its annual Cyber Savvy Canada public education campaign. To assist SME owners considering cyber insurance, IBC has also developed a self-assessment tool.
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