Cyber insurance has become a crucial component of organizations‘ risk management strategies in recent years. With the increasing frequency and sophistication of cyber-attacks, more businesses are recognizing the importance of having financial protection in place to mitigate the potential damages caused by such incidents. According to a new report by UK backup solutions provider Databarracks, the number of organizations subscribing to cyber insurance has been on the rise. However, despite the growing adoption of cyber insurance, the number of claims being made has seen a significant decline.
In its 2024 Data Health Check report, Databarracks revealed that 66% of UK organizations reported having cyber insurance in 2024, a notable increase from 51% in 2022 and 57% in 2023. This trend indicates a growing awareness among businesses about the risks associated with cyber threats and the need for adequate protection. Despite the higher number of organizations with cyber insurance, the report also highlighted a sharp decrease in the number of claims being made. In 2022, 58% of organizations made cyber insurance claims, but this figure dropped to 36% in 2024.
Furthermore, the financial compensation being sought through cyber insurance claims has also decreased significantly. Claims exceeding £1m ($1.3m) dropped from 48% to just 16% in 2024. This suggests that organizations are becoming more resilient in their response to cyber incidents and are better equipped to handle the aftermath of an attack.
One key factor contributing to this increased resilience is the broader adoption of business continuity plans among organizations. The Databarracks report revealed that 82% of organizations had a business continuity plan in place in 2024, with 57% reporting that their plan was up to date. This marks a significant improvement from previous years, where fewer organizations had such plans in place. Additionally, three-quarters of organizations have implemented solutions for air-gapping their backups, which proved to be effective in recovering systems from backups without having to pay ransom in response to ransomware attacks.
The report also highlighted the role of stricter cyber insurance policies in driving organizations to enhance their cyber defenses. James Watts, a managing director at Databarracks, commended the recent changes in cyber insurance coverage, which he believes have incentivized organizations to elevate their preparedness levels. Watts emphasized that well-drafted cyber insurance policies are not meant to encourage ransom payments but rather to promote stronger cybersecurity practices.
In conclusion, the findings of Databarracks‘ Data Health Check report underscore the importance of proactive cybersecurity measures and robust business continuity planning in mitigating the impact of cyber incidents. The decline in cyber insurance claims coupled with the increase in organizational resilience signifies a positive shift towards a more secure and prepared business environment. As cyber threats continue to evolve, it is essential for organizations to stay vigilant, invest in cybersecurity measures, and prioritize risk management strategies to safeguard their operations.