As if companies did not have enough to worry about in this pandemic, now they can add to their concerns increased costs for heightened internet security, one way or the other; either through implementing better security measures to protect against data breaches, or possibly paying a higher premium for cyber security insurance policies.

Cyber insurers, leery of security risks created by remote working and other effects of the coronavirus pandemic, are stepping up scrutiny of policyholders' security arrangements. These efforts could result in costlier policies, or even coverage denials for companies.

One thing that's become evident for those seeking cyber protection is that underwriters are asking a lot more questions, as remote working increases cyber risk and the more companies implementing this practice on an insurer's book of business, the greater the risk to the insurer that losses will exceed the premiums charged for the coverage. Overall, cyber coverage costs for insurers have been edging up, even before the pandemic. Direct loss ratios, which measure the percentage of income that insurance companies pay to claimants, for stand-alone cyber insurance policies rose to 47% in 2019 from 34% in 2018, according to data from regulatory filings compiled by Fitch Ratings*. In addition, the average ransom demand increased to about $225,000 in the first quarter of 2019 from the 2018 average of about $116,000. With these increased costs, insurers had already been looking at enhancing their understanding of cyber risks and coming up with better modeling techniques; nevertheless, the pandemic has caused insurers to step up their underwriting practices as well.