Cyber has changed from a product that was once hard to sell to one that’s hard to buy, amid an increase in claims and with coverage and capacity more difficult to find, Emergence Insurance says.

Head of Underwriting and Product Development Jeff Gonlin says the global cyber insurance market is experiencing “a lot of red ink” and an S&P Global Market Intelligence report found the industry’s loss ratio last year rose to 72.8%.

“In Australia, the claim frequency is stable, but the severity is driving loss ratios up,” he told an Emergence webinar.

Emergence claim statistics show its average claim severity has risen to 3.15 times the 2017 average. Ransomware incidents represented 31% of claims, ranking behind business email compromise (BEC) but with more severe impacts.

“BEC can hurt a business, but ransomware can kill it,” Mr Gonlin said. “It’s like comparing the common cold and COVID-19.”

Head of Claims and Incident Response Blake Baxter says quick action is essential when a cyber attack happens.

“Key forensic evidence can be lost if we’re not told about an incident immediately,” Mr Baxter said. “Sometimes policyholders think they have a situation under control, but IT vendors can have a vested interest in covering up the severity of a breach.”