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COLORADO SPRINGS, Colorado – Cyber liability insurance buyers will likely continue to see significant rate increases during upcoming renewals, but the huge hikes of the past year may be behind them.
Insurers are still keen to write cyber business but have restricted their capacity after paying significantly higher losses during the COVID-19 pandemic, said insurers and brokers at the Insurance Leadership Forum in Colorado Springs this week.
The cyber liability insurance market became challenging for insurance buyers with rates rising and capacity shrinking after the rise in breach incidents and ransomware attacks in 2020, said Christian Hoffman, CEO of Aon PLC’s cyber solutions North American division.
The insurance sector, though, invested in technology and underwriting tools, which led to more stability in the market, he said during a panel discussion on cyber risk at the conference, which is organized by the Washington-based Council of Insurance Agents & Brokers.
“Hopefully, we’ve created a little bit more of a stability baseline, which will give us a longer-term view of supporting this risk,” he said.
Policyholders have become more focused on cyber “hygiene” and cybersecurity in response to the difficult insurance market of the past 18 months, said Mike Karmilowicz, New York-based president and CEO, insurance division, at Everest Re Group Ltd.
“I think the cyber market will continue to stay firm. Rate is continuing to come down, but you're talking about rates that were up 100+% for the last nine months,” he said.
Insurers in the cyber market had reduced capacity, but the current available capacity is likely to hold, insurers and brokers say.
According to a report released by Marsh LLC last week, average cyber liability rates increased 54% in July compared with 133% in December 2021.
Cyber rate increases are slowing but rates are still rising significantly, said Neil Kessler, Dallas-based president and chief operating officer of CRC Insurance Services Inc.
According to CRC’s analysis, 82% of the cyber liability accounts the wholesaler placed in June saw rate increases of at least 20%, and 44% of those accounts had an increase of more than 50%.
Cyber insurers that are in the market are looking to remain in the market.
Cyber liability “is a really busy market,” with a large number of insurers, but rates continue to increase significantly, said Kevin Kerridge, New York-based CEO of Hiscox USA, a unit of Hiscox Ltd. that targets small businesses.
“I don't think supply is denting the demand. It feels like historically the prices haven't been where they need to be and we’re not at the point yet where the supply of capacity is eroding the prices that carriers need on those risks,” he said.