Higher cyber premiums ’may incentivise attackers to escalate threats’

Higher premiums “may actually incentivise attackers to escalate threats”, Tom Wakefield, global chief executive at Gallagher Re, has warned.

Speaking at Zywave’s annual Cyber Risk Insights Conference yesterday (2 April 2025), Wakefield said that the current cyber threat rate means ”you are 167 times more likely to be a victim of a cyber attack than a burglary”.

However, he added there had been premium rises following a surge in ransomware incidents and warned that despite there being an increased awareness of cyber threats, demand for cyber insurance has not grown as expected.

Wakefield added: “Demand actually fell, despite it being a time when potentially clients were more acutely aware of the potential threat to their business.

“Higher premiums do not reduce loss frequency. Instead, they may actually incentivise attackers to escalate threats.”

Ransomware

In February 2024, a report from Node4, entitled Mid-Market IT Priorities Report 2024, revealed that IT decision-makers from the insurance sector felt that ransomware was the top cyber security risk for 2024.

This came after cyber underwriting specialist Corvus Insurance said there were a total of 4,496 victims worldwide on ransomware leak sites in 2023 – surpassing 2022’s total of 2,670.

Wakefield said that rising premiums following ransomware claims have resulted in stricter underwriting terms.

However, he said that ”it’s a great time to be in this [cyber] marketplace”, with total reinsurance capital exceeding £497bn ($650bn).

He added: “If an event falls within the parameters of what is expected, there is a greater willingness of stakeholders to recommit in the aftermath.”