Global broker Aon has released a new report on the state of the “buyer-friendly” cyber and errors and omissions (E&O) market, with the highlight being the distinct changes that is making early 2023 a prime period for buying insurance under these lines.
One of the report’s key highlights revealed that substantial new capacity will help soften the market, and that Aon expects premium rates this year to be more competitive compared to the past 24 months. This development is driven by improved loss ratios and an influx of new capital that has created a higher global premium pool, especially in excess markets.
While the market is in for more competitive pricing, exclusions under war and infrastructure, as well as “widespread events” remain in terms and conditions. Updated war exclusions were introduced, but are inconsistent across the global cyber insurance marketplace, while infrastructure exclusions merit analysis amongst brokers and insureds.
According to the report, while the underwriting process remains vigorous, this presents an advantage for businesses that are well-placed to share their security narrative.
According to the specific regional findings, most insurers in the UK and EMEA region are looking to grow their cyber portfolios again. In addition, there is more appetite from markets to move down programs providing competitive tension on both a primary and first excess basis.
While ransomware activity has picked up in the first quarter, loss ratios have improved in the second half of 2022. More and more markets are also highlighting biometric information collection and disclosures as an area of concern, mostly stemming from an uptick in class action lawsuits resulting from improper collection, use, or retention.
Underwriters in the region also continue to heavily scrutinize operational technology and supply chain risk, highlighting the need for quality data collection and presentation at renewal.
On the pricing side of things, the favourable rate environment fostered in the second half of 2022 has continued to 2023, hence the “buyer’s market.” Heightened competition in the market is also expected to continue driving the good trend forward throughout the rest of the year.
Lastly, Aon also considered the effects of the conflict in Ukraine, stating that they have not yet emerged. However, underwriters have remained cautious on the potential for cyber disruptions in the region.
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