What's driving high internet insurance claims?

Large cyber insurance claims (exceeding 1 million euros) increased in both frequency and intensity in the first quarter, with two-thirds of losses involving factors tied to data and privacy breach incidents.

According to Allianz Commercial's latest cyber risk outlook, major cyber claims saw a 14% increase in frequency and 17% in severity year-on-year during the first six months of 2024. Class-action lawsuits, especially in the US, push for high costs. to companies involved in privacy violations.

Michael Daum (pictured), global head of cyber claims at Allianz Commercial, said the growing importance of data breach losses among cyber insurance claims is being driven by several notable trends.

“The increase in ransomware attacks including data exfiltration is a result of changing attackers' strategies and increasing trust between organizations that share more and more records,” he said.

According to Daum, the share of such non-violation requests has tripled in number in just two years.

“We are seeing more claims of data privacy violations in the US where there is a growing trend of class action lawsuits against large US and international companies related to privacy violations, such as consent and data use,” Daum noted, stressing that these are legal battles. they can be more expensive than ransomware incidents.

Statistics from law firm Duane Morris show that data privacy-related lawsuits filed in 2023 in the US will double to more than 1,300 from 2022. Notably, the 2023 MOVEit data breach led to more than 240 lawsuits that were later consolidated, indicating one trend. The incident can lead to huge legal costs.

Meanwhile the increasing use of artificial intelligence in various fields is expected to continue to change the Internet and privacy risk landscape. AI's reliance on large datasets – often containing personal, health, and biometric information – creates new risks of breaches and breaches of privacy, especially if tools like chatbots are mismanaged or companies fail to obtain proper consent to process data.

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