Insurers race to cyber; signs of competition put paid to runaway rates
Cyber insurance has fully turned the corner on the hard market that had run well into 2022, with carriers now fighting more openly for new business or retentions, likely holding rate growth over the coming period to the single digits, analysts at global broker WTW have claimed.
“Competition from cyber underwriters is also driving down pricing as markets look to write new business and retain their renewals,” analysts wrote.
Rising competition is visible at every stage in the process. WTW cites an ability to easily cull 2-3 quotes on certain risks and at a pace brokers could only dream of just one year ago. Incumbents appear “eager” to retain business and, with underwriters softening on the question of limits, excess placements have also become “less challenging.”
“Capacity is flowing back into the market,” analysts said of total market capacity and individual limits, citing the resurrection of $10 million blocks on towers versus the prior practices for $5 million blocks and “unusual quota share arrangements.” Certain markets are said to have started to quote full limits across the board again as the fight for clients or retentions escalates.
The upshot: a hefty take-down from the 50-150% rate increases hitting some insureds in early 2022. The taming of the hard market has come amid "a reduction in overall cyber claims activity and improved controls by insureds."
“We are now seeing flat primary and excess cyber renewals or even 5% to 10% decreases and capacity continues to broaden," analysts rote of the state of play.
Rates and terms and conditions are continually tilted towards insureds with demonstrable super-hygiene and away from more lax rivals. But policies can loosen up where security holds strong. WTW has seen cases where “sone underwriting questions,” including supplemental ransomware applications, “can be bypassed if security controls are good.”
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