Cyber rate hikes reflect the increased threat: Cyber Risk Europe
The cyber risk transfer market will undergo profound changes in the coming years as carriers hone or change their risk appetite and the industry gets better at helping clients with risk mitigation instead of simply selling reactive policies. The panel also debated the extent to which recent rate hikes reflect the increased cyber threat to businesses.
Those were some of the overarching findings of a panel discussion held at Cyber Risk and Insurance Innovation Europe 2023, a conference held in London on Tuesday, February 7. The session, called ‘Finding a path to profitable growth–the challenge of underwriting cyber’, featured speakers from Swiss Re, Aon, CFC Underwriting and Liberty Specialty Markets. It was moderated by Brian Hall, consultant, Camelot Network.
Lindsey Nelson, cyber development leader, CFC Underwriting, described the cyber market as presenting carriers with many opportunities for growth; the challenge, she said, is growing a book of business profitably while also ensuring coverage remains as broad as it has been historically.
“We have learned what has worked and what has not worked by looking at some of our peers in the market. We can see what didn’t work and what could have been done better.” She added that the two most important things underwriters need to do to develop a profitable book is to invest in technology capable of constantly scanning the threat environment and pivot to offering preventative services as opposed to selling them reactive wordings.
Matthew Hogg, strategic head of cyber underwriting, Liberty Specialty Markets, described the cyber market as a land of opportunity for carriers seeking premium growth but argued that more nuances will emerge in terms of the risk appetite of carriers.
“We have seen some specialists emerge but there are also a lot of generalists. Some have been late to the party, but they also have the client relationships to exploit. There will be certain markets for SMEs versus large corporates; different appetites will emerge. And only a handful of the markets have invested in technology around horizon scanning so far. That will change. There will be more sophistication and people will be more targeted in terms of where they want to play.”
Fabian Willi, head of cyber EMEA & Product Centre, Swiss Re, noted that his personal challenge is to ensure he understands the business model of clients. He noted that when he speaks to new entrants to the market he wants to see clarity in their business plan and willingness to invest in both technology and talent. “They should not be opportunistic,” he said.
Moderator Hall suggested that the industry could do more to help businesses better mitigate cyber risks. He suggested some large businesses remained unsophisticated in the way they managed cyber risks.
Willi at Swiss Re agreed the industry has a part to play. “We shouldn’t underestimate the role we have to play in educating companies around good cyber hygiene,” he said.
Naomi Cresswell, head of mid-market cyber – global, Aon, added that the industry needed some good PR around its cyber offering to explain its advantages, the help available while “dispelling some of the negative messages around cyber”.
She also noted that the cost of coverage has increased significantly for some clients. That means the broker’s job is to educate clients on the value of that coverage. “We need to flip it into what it means to the business. There is an education piece that is needed to explain the value of insurance versus the cost of the premium. You need to show clients what a loss looks like without insurance in place.”.
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