Cyber demand is a deep well, outstrips supply long-term: Moody’s

Demand will outstrip supply on the cyber market for ages to come with new sources of demand set to surface for every uptick in supply along the way, analysts at the  Moody’s rating agency have suggested.

“The cyber insurance market will likely grow significantly in the coming years as the vast majority of cyber losses remain uninsured,” Moody’s analysts wrote. “Demand still outpaces supply.”

That cyber coverage gap is not just a tale of the haves and have nots, Moody's noted. The haves are widely under-covered.

“Most purchasers of cyber insurance are buying policies up to their internal insurance premium budgets, not according to their risk profile,” Moody's analysts wrote of industry insider views to the market.

Capacity constraints showed early signs of easing in 2022, taking the edge off of a hard market grounded in ransomware loss experience, potential for systemic risk, limitations on reinsurance capacity, and the risks of extremely large losses.

Moody’s cites the arrival of new carriers and additional reinsurance capacity as the new driver.

New arrivals find a “relatively concentrated” US market, with over three quarters of the direct premiums written by the top 20 providers. The top five names have a third of the market.

That top-five leaderboard starts off with Chubb with an 8,.4% market share, a data set assembled by Moody's indicates. Chubb is followed by Fairfax at 7.8%, AXA at 7.3%, Tokio Marine at 5.1% and Arch Capital at 4.8%.

Beazley, Ascot and R&Q are most heavily cyber-exposed as a portion of their own US books. Beazley has 28% of its US exposure via cyber, ahead of 19.6% for Ascot and 15.4% for R&Q, but all three remain lesser players in slots 16 to 18 on the national rankings by DPW with market shares below 2.5%.

Back on the leaderboard top-five, three carriers show cyber at or above 5% of their US book: AXA at 6.9%, Arch Capital at 5.8% and Fairfax at 5.1%.

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