Cyber insurance market: what’s worrying insurers?
Insurers have become more careful with their underwriting processes, tightening policy language with more exclusions and requiring customers to have proper cyber resilience practices in place, according to an April 2024 report by Fitch Ratings.
US cyber renewal rates have fallen for the last three successive quarters, but despite concerns around ransomware and cyber catastrophe exposure, new capital is still entering the market.
In April 2023 global broker Marsh found that, regardless of this capital, cyber insurance pricing continued to moderate in 2023, with an 11 percent price increase in the US and 10 percent in UK compared with 28 percent and 34 percent, respectively, in Q4 2022.
Catastrophic exposure from cyber risks is also worrying insurers, and considerable resources are spent on modelling risk aggregations and measuring maximum potential losses from a severe cyber event.
It is clear that market conditions are challenging, yet cyber insurance does offer substantial long-term growth; the question is how to get there.
Deloitte’s 2017 report, titled “Demystifying cyber insurance coverage” raised three issues facing insurers: how much third-party data should they be buying, how to standardise policies and how to leverage their expertise to support underwriting, pricing and, ultimately, their clients.
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