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Property Casualty

What’s Happening in the Cyber Liability Market?

Ryan Anderson
Ryan Anderson
Property Casualty

When you think of Cyber Liability insurance buying, you likely cringe at the thought of experiencing what many companies have endured over the past few years. Rightfully so. The pressures and scrutiny over internal controls, or lack thereof, and the ultimate punitive rate increases, retention hikes, and capacity limitations were a cause of great heartburn for all involved.

Have the insurance companies done enough to “right-size” their portfolios? Have buyers done enough to shore up their risk profiles to eliminate, or greatly reduce, the likelihood of loss?

Regardless of the answer to those two questions, the Cyber Liability market has made a rather quick reversal over the course of the past few quarters. Many insureds are experiencing double-digit premium decreases, less scrutiny from underwriters, and on occasion, lower self-insured retention levels.

However, based on actual claim experience and forecasting potential negative loss trends, many may think the answer to those questions is still a resounding “no.” Ransomware events, for one, are greatly outpacing the year prior, and with unknown of exposures like artificial intelligence coming down the pike, one would assume a period of caution, if nothing less, from the insurance marketplace.

So why the change in appetite? The answer is rather simple to understand. There has been an influx of insurance carriers writing new capacity in the Cyber Liability sector over the last 24 months. These new entrants, with no historical loss constraints, have watched from the outside as premium levels surged to unprecedented levels coupled with the improved risk profiles of buyers. This made for an environment that was too appealing for many to ignore.

The additional capacity has allowed buyers to leverage the marketplace (primary and excess layers) to obtain improved terms and conditions in an environment that could suggest being unwarranted.

Could we face yet another market reversal from these new carriers as the inevitable losses mount? Possibly, but given the pain experienced by buyers over the course of their last few renewal cycles, it is a well-deserved reprieve that I would suggest taking advantage of as we do not know how long this will last.

Do you agree? What have you seen and what are you dealing with? I’d love to hear! We’d also be happy to talk with you more in-depth about the overall Cyber Liability market. Reach out to us and let’s chat.

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