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Ransomware attacks pushed the loss ratio for U.S. cyber insurers up 10% in 2019, according to a new report from Aon plc.
Aon reported the jump in loss ratio, or the percent of the claims paid by an insurer compared to the premiums earned, from 35% in 2018 to 45% last year.
That will usher in a period of stricter underwriting, higher prices, and more of a focus on risk control, according to Aon.
“Although ransomware has been on the rise for years, it was 2019 when the insurance industry felt the impacts far and wide. Unlike the NotPetya claims of 2017, these losses were not limited to a few large multinationals but were spread across companies of all sizes, and especially affected the small commercial segment,” said lead author Jon Laux, Aon head of cyber analytics for reinsurance solutions. “We expect that ransomware will be the main claims story of 2020 as well.”
Aon noted that loss ratios increased for both standalone and package cyber policies, but the 12.7% increase was “particularly stark” for standalone policies.
A jump in claim frequency also contributed to the loss ratio rise, even though claim severity fell an average of $1,692 from 2018 to 2019.
Read Aon’s U.S. Cyber Market Update report here.
