A rapid rise in cyber premiums as a result of surging ransomware attacks is leading to challenging market conditions similar to those experienced in directors’ and officers’ (D&O) cover, broker Marsh has told a parliamentary hearing.

The Standing Committee on Economics was told on Friday that D&O premiums for Marsh’s ASX-listed clients went up by an average of 200% last year due to soaring shareholder class actions. Some clients are taking on massive excesses of up to $200 million and others have stopped buying insurance protection altogether.

Cyber is now showing similar patterns, Marsh Head of Risk Management Asia and Pacific Scott Leney told MPs.

“I would say that the insurance market, generally, for cyber insurance is very challenged at the moment, with insurers withdrawing capacity and increasing premiums significantly,” he said.

“This has largely been as a consequence of the recent rise of ransomware.

“What we really have, in my opinion, after a really short period of time, is a situation that is verging on where we were – and, indeed, still are today – with directors’ and officers’ liability insurance.”

Marsh Head of FINPRO Australia Craig Claughton said ransom demands have increased significantly in value over the past year.

“Where it might have been $500,000 or perhaps $1 million, it’s now not uncommon to see $10 million, $15 million, $20 million and beyond.”

Committee Chair Tim Wilson asked if it should be made illegal for insurers to reimburse companies that decide to pay ransoms, to help cut out the incentive for criminals.

Mr Leney said “it’s hard to see evidence of companies who purchase cyber insurance being specifically targeted by cybercriminals”, but Mr Claughton said payment of ransoms is a concern for insurers.

“We are seeing them starting to limit the form of cover that they’re willing to provide there, and I wouldn't be surprised if, in the not too distant future, that disappeared completely,” he said.

“I think that, as we’ve seen in some other countries, if it is made illegal, it may assist that moving forward much more rapidly.”