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The cyber market continues to grow, but at a slower rate, says A.M. Best Co., in a report issued Monday.
Direct premiums written grew 12.6% in 2018 for both stand-alone and packaged policies, with premium volume totaling $2.03 billion in 2018, according to the report issued by Oldwick, New Jersey-based A.M. Best, Cyber Insurers are Profitable Today but Wary of Tomorrow’s Risks.
In the two previous years, however, direct premiums written grew by more than 30%, said the report.
Similarly, Aon PLC said in a report issued last week that cyber growth is slowing.
The report is based on National Association of Insurance Commissioner’s Cybersecurity and Identity Theft Insurance Coverage Supplement.
Best said growth figures may be understated, though, because the total does not include business written by captives, which are not reflected in the supplement.
“Growth is being driven by organizations wanting to minimize cyber and reputational risk and protect their balance sheets and bottom lines,” said the report.
It said small and medium-sized enterprises are more likely to buy packaged policies, while larger companies tend to purchase stand-alone cyber policies with much higher limits.
“The standardization of cyber policy forms has allowed smaller insurers to offer cyber coverage, with many of these carriers ceding 100% of the risk to reinsurers,” said the report.
The report said while there were more than 12 million reported claims in 2018, the business remains profitable for insurers, with low loss ratios because when these policies are priced “carriers apply higher loads, owning to uncertainty, compared to other lines.”
Chubb Ltd. is the larger cyber insurer, with $325.8 million in direct premiums written, followed by Axa XL, a division of Axa SA, with $255.9 million, and American International Group Inc. with $232.6 million, according to the report.
The growth rate for U.S. insurers’ cyber business is slowing, Aon PLC says in a survey issued Tuesday.