Rapid rise in rates could blur key underlying trends in 2022 cyber, warns Gallagher

Stop judging the cyber market by the rates as the real story into 2022 will be mass policy exclusions and the wholesale expulsion of the least security-aware clients, re/insurance broker  Arthur J Gallagher warned the corporate sector in a report.

"The cyber insurance buyer needs to be wary that rates alone should not be the barometer by which they measure the hardness of the 2022 market," John Farley (pictured), Gallagher's managing director for cyber and report author, wrote.

"They will need to maintain a wide lens view of other factors, including more restrictive coverage terms, mandatory sub-limits and exclusionary language specific to certain global and widespread cyber incidents."

Underwriters, when not writing aggregate risks out of policies or quite low sub-limits into policies, will be writing select clients right off their books.

"The trend of greater underwriting discipline will continue with the least attractive risks facing non-renewals and left with few viable options," Farley wrote.

Rate increases and resultant premium growth need not spell an increase in total coverage, Farley hinted.

"Capacity questions have not been settled, and exactly how much will be available in the U.S. and global cyber markets in 2022 remains an open question," he wrote.

Reinsurers will likewise be circumspect about backing up the market and offer a key determinant of capacity.

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