Record-Breaking Year for Cyber Insurance Claims in North America (HIPAA Journal)

Record-Breaking Year for Cyber Insurance Claims in North America

Tuesday, June 18th, 2024 Insurance Industry Risk Management Technology

According to an analysis by insurance broker Marsh, 2023 witnessed a record number of cyber insurance claims filed in North America, surpassing 1,800 claims from clients in the United States and Canada. This marked the highest number of claims to date. The healthcare sector reported the highest number of claims, accounting for 17% of the total, followed by the communications, retail/wholesale, finance, and education sectors.

A notable rise in cyber extortion events, particularly ransomware attacks, contributed significantly to the surge. Although fewer than 20% of the claims were related to extortion, the frequency of these events increased significantly from the previous year. Factors such as the Russia-Ukraine conflict and law enforcement actions had previously suppressed ransomware activities in 2022.

The financial impact of these breaches has also risen. The average cost of breach-related expenses reached $1 million by Q4 2023, up from $963,000 in Q3. While the median cost remained stable at around $160,000, the highest reported breach cost soared to $23.4 million. Extortion demands and payments saw substantial increases, with median demands rising from $1.4 million in 2022 to $20 million in 2023, and median payments escalating from $335,000 to $6.5 million.

Despite the increasing costs, the percentage of clients paying extortion demands has decreased, reflecting a trend towards negotiation and resilience. Marsh emphasizes the importance of robust cybersecurity measures, incident response planning, and regular tabletop exercises to mitigate the impact of cyber incidents.

Claims Pages Staff Writers are dedicated professionals covering a broad spectrum of insurance topics, including auto, catastrophe, education & training, fraud, legislation, liability, life & health, litigation, property, risk management, technology, underwriting, and workers' compensation. With over 25 years of distribution, our publication brings you accurate and timely information to keep you informed and ahead in the claims industry.

External References & Further Reading

Mid-America Catastrophe ServicesMid-America Catastrophe ServicesWeller SalvageSupportive Insurance Services

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