Cyber-insurance companies appear to be benefitting from a continued surge in prices, even as the frequency of claims falls due to corrective steps they’re taking with clients, it has emerged.
Global insurer Beazley, listed with Lloyd’s of London, said on Friday that premium rates on renewal businesses increased 23% year-on-year in the third quarter, driving gross premium revenue to over $3.7bn.
A large chunk of these price rises come from the firm’s Cyber & Executive Risk Division, which saw rates increase 48% year-to-date (YTD) compared to the same period last year. That means the division accounted for $991m in Q3, almost a third of total premium income for the period.
“I remain excited about the opportunity in the cyber market and with our disciplined and prudent risk selection, our market leading product offering and the ongoing investment in our cyber infrastructure, I believe we are in a great position to capitalize on this,” said Beazley CEO, Adrian Cox.
Prices for cyber-insurance continue to rise despite a “downward trajectory” of claims following remediation work done with customers over the past year, it said.
Although not explained in full, this is the idea that by offering cybersecurity advice to clients, insurers can enhance their resilience to threats through best practice steps. This reduces the likelihood of a successful breach and resulting claim.
According to reports, these trends can be seen more broadly. UK-listed Hiscox reported “significant” quarterly growth in cyber rates last week and a 6% increase in gross premiums YTD versus 2020.
Premiums have been soaring across the US and Europe in response to mounting ransomware attacks, which had led to surging claims. Ransomware was responsible for the biggest volume of insurance claims in the first half of 2020, according to provider Coalition.
Last month, a US Cyber Market Outlook report from wholesale insurance broker Risk Placement Services warned that providers have been “battered” by higher-than-anticipated losses and are now charging far more for less coverage.
A May 2020 report echoed the same story: claiming prices had risen 10-30% in late 2020, and that customers in sectors such as healthcare and education were being offered lower coverage limits.
It would be hoped that as organizations start to build in greater cyber-resilience, and insurers get better at specifying the defensive measures they expect, rates will eventually start to fall.