Cyber insurance is an investment that companies should not overlook and it should be included as part of a “hybrid” approach to address digital threats, broker Honan says. 

“There is an emerging narrative from C-suite leaders that Australian businesses are better off forgoing cyber insurance and instead investing the money saved on an insurance policy into building critical infrastructure,” Professional Risk Placement Manager Ben Robinson said. 

“This is flawed thinking. Businesses need to take a hybrid approach investing in both internal capabilities to protect cyberattacks, as well as insurance policies to protect them in the event of a breach.” 

Mr Robinson also weighed in on the theory that investing in a cyber insurance policy is an admission of weakness or lack of confidence in a business’s ability to protect against cyber-attacks. 

“The reality is that no cyber protection measures are foolproof and there is always capacity for a breach, no matter how strong a business’s defences may be,” he said. 

“Organisations must also demonstrate an increasingly stringent minimum level of cyber hygiene to secure a policy in any case, so having a policy in place is a sign of due diligence and compliance rather than weakness.” 

He says cyber attacks can have significant cost implications to businesses, often exceeding $150 million for incident rectification. 

“Cyber insurance not only provides access to capital in times of crisis, but also connects businesses with an ecosystem of top-tier vendors necessary when responding to a breach,” Mr Robinson said. 

“This is invaluable when a timely response is crucial to meet regulatory requirements, while minimising financial and reputational damage.” 

On the state of the cyber market, Mr Robinson says there has been “significant changes” over the past year.  

“Initially, there was a period of disruption characterised by limited insurance capacity, increased global demand, and a major pricing correction on the back of a high-volume of breaches and losses for underwriters,” Mr Robinson said. 

“However, the market conditions are now stabilising due to improved underwriting results. Pricing has either levelled off or decreased in Australia, including other regions globally, limits are increasing, and competitive forces are leading to more customised underwriting decisions that align with companies' risk profiles.”