Despite ‘no material change in exposure’, insurers are upping premiums by 100% on average and reducing capacity
Rate increases of more than 300% have “not been uncommon” for cyber policies placed in the London market, according to independent Lloyd’s and London market broker Miller.
Within its half yearly London market update – July 2022 report, published today (28 July 2022), the broker commented that today’s cyber insurance market is still suffering from hard market conditions and corrective pricing, with London market-based cyber premiums growing by around 100% in the first two quarters of 2022.
Debbie Hobbs, head of cyber, technology and media at Miller, explained: “The trends seen through 2021 have continued into Q1 and Q2 of 2022.
“Premiums have been increasing by 100% on average and it has not been uncommon to see rate increase of [more than] 300% for risks with no material change in exposure.
“This is often coupled with higher retentions and more restricted coverage. Looking ahead, it is expected that this will continue through the remainder of 2022.”
Hobbs added that “market appetite remains restricted” for cyber risks in the London market, “with underwriters only looking to quote risks within [their] core appetite”.
She continued: “Insurers have re-evaluated their portfolios and stripped out risks which no longer fit within their strategy, only retaining insureds with best in class controls.
“Many insurers are also stripping back certain elements of coverage, such as non-IT dependent business interruption, or imposing ransomware restrictions.
“In addition, certain industries that were difficult to place in a softer market are now almost impossible, which includes education, municipalities, government entities and IT and managed service providers.”
Furthermore, the London market’s capacity for cyber risks has also taken a hit thanks to firms exiting the market – although Hobbs is hopeful that new entrants can mitigate the ramifications of this.
“Since the beginning of 2022, cyber capacity has been further reduced by the exit of two cyber MGAs. This has particularly impacted insureds within the SME space,” she said.
“However, there has been the introduction of a small handful of new entrants to the market, which will bring some additional capacity to London on an excess basis.”
Hobbs advised brokers to employ “early engagement” when dealing with cyber risks in the London market because the placing process is now “more time-consuming” due to insurers becoming “very selective on deploying capacity, which has led to smaller line sizes”.
Many insurers will deploy a maximum of $5m (£4.1m) for a particular cyber risk, she noted, although $2.5m (£2m) is “more commonplace”.