Cyber-Insurance Market Continues To Grow Though Price Hikes Slow
May 31, 2023
Cyber insurance is the fastest-growing segment of the US property-casualty insurance segment, with direct written premiums increasing 51 percent year on year in 2022 to more than $7.2 billion, according to Fitch Ratings.
Fitch said, however, that cyber-insurance premium rate increases should continue to moderate, as substantial improvements in the segment's results have led to increased competition and moderating pricing trends.
Cyber insurance represented approximately 1 percent of US property-casualty insurance premiums in 2022, according to the rating agency. Stand-alone cyber coverage is responsible for 70 percent of cyber-insurance premiums, due to increased policyholder demand for protection and efforts by insurers to reduce ambiguity in coverage terms or silent cyber risks, Fitch said.
Demand for cyber protection as part of organizations' risk mitigation efforts expanded dramatically despite sizable increases in cyber-insurance prices, Fitch said. Cyber-renewal rate premiums are now decreasing, with Fitch citing data from the Council of Insurance Agents & Brokers showing fourth-quarter 2022 increases of 15 percent down considerably from the record 34 percent during last year's third quarter.
Fitch said it expects cyber-insurance rates to flatten further, which could result in a negative shift in pricing trends, similar to current trends in the directors and officers liability market following a sharp rise in rates. "The current downward cycle is unlikely to shift, barring a new wave of cyber incidents with higher loss severity or a large cyber catastrophe event," a Fitch statement said.
Demand for cyber insurance along with price increases have attracted new participants to the cyber market, according to Fitch. The top 10 US cyber insurers held 52 percent of the cyber-insurance market share at the end of 2022, the rating agency said.
May 31, 2023