Cyber liability and public company directors and officers liability insurance are showing signs of increased competition, with rates for some risks falling, a trend that runs counter to the modestly higher rates in other areas of the excess and surplus lines sector. 

But experts say the trend in cyber in particular could change quickly if there is a further uptick in ransomware claims.

Michael Drummond, head of cyber and tech E&O at San Francisco-based insurtech managing general agency At-Bay Inc., said, “We’re seeing a lot more competitiveness,” particularly in new business, in cyber and “a lot of pressure on rates.” 

A few years ago, most insurers offered only $5 million in capacity. Now, many are offering $10 million again. Some markets are also easing their underwriting guidelines, Mr. Drummond said. 

With that happening, and ransomware claims picking up, “they’re effectively moving in two directions, which is not a great recipe for long-term success,” he said.

Cyberint, a Petah Tikvah, Israel-based cybersecurity company, reported a 67% increase in second-quarter ransomware cases worldwide, compared with the first quarter, and a 97% increase from 2022’s second quarter.

“The cyber market is starting to flatten and there’s been some clear rate deceleration,” said Timothy W. Turner, president of Chicago-based Ryan Specialty LLC. But there has also been a resurgence of ransomware losses, “and so the claims have spiked back up in that segment,” he said. 

There could be “another wave of tightening if these ransomware claims continue to accelerate,” he said.

Steve Girard, Alpharetta, Georgia-based regional president of Markel Group Inc.’s southeast region, said the cyber market “has definitely crested from where it was in the past two years, with rates coming down a little bit, but we think that will be short-lived, and the market cannot support rate decreases.”

The market can change quickly, said Sanjay Godhwani, Boston-based president of Berkshire Hathaway Specialty Insurance Co. North America. If rates fall as the insurance sector becomes more competitive, it is “just as likely to switch right back” if ransomware attacks increase and loss costs go up.

There is also increasing competition in public company D&O. “We’ve never seen such a quick swing” from a hard market, said Liz King Kramer, New York-based president of excess and surplus lines at Munich Re Specialty Insurance. 

“We are actually being more cautious in that space right now because it seems like the market is chasing after top line growth,” she said.

Mr. Girard said of D&O, “It is one of the few product lines where we’re currently seeing fairly meaningful softening, to the point where we are walking away from some business.”