US Cyber-Insurance Premiums Grew 61 Percent to $6.5 Billion in 2021

Cyber insurers generated approximately $6.5 billion in premiums in the United States in 2021, a 61 percent increase from the prior year, according to the National Association of Insurance Commissioners (NAIC).

The NAIC's October 21, 2022, report on the cyber-insurance market is based on data found within the NAIC's Cyber Supplement, as well as alien surplus lines data collected through the NAIC's International Insurance Department.

Insurers writing stand-alone cyber-insurance coverage reported approximately $4.5 billion direct written premiums in 2021, the NAIC said, while those writing cyber insurance as part of package policies reported approximately $2 billion in direct written premiums.

US-domiciled cyber insurers wrote $4.8 billion in direct written premium, according to the NAIC report, while alien surplus lines insurers wrote $1.7 billion in direct written premiums.

The NAIC report notes that data breaches increased 68 percent in 2021 from the prior year. Breaches involving personally identifiable information such as Social Security numbers increased slightly from 80 percent of breaches in 2020 to 83 percent in 2021, the NAIC said.

Because of the increase in cyber risks, businesses are facing a more demanding underwriting process, the NAIC report said, with cyber insurers more thoroughly scrutinizing buyers' security controls, internal processes, and cyber-risk procedures. Insurers are also becoming more cautious in examining insureds' risks resulting from third parties working with or contracting with the insured, the NAIC said.