Is the cyber market turning another corner?

Practice leader on looming changes in the competitive market

Is the cyber market turning another corner?

Insurance News

By Gia Snape

The cyber insurance market is seeing stability after several years of price increases, coverage restrictions, and high cybersecurity requirements from carriers.

The slowdown in rate rises has been a reprieve for clients renewing their cyber cover this year, but an evolving threat landscape and other pressures could see the market turning once again, with one cyber practice leader saying cyber is less than a year away from significant changes in pricing.

“All of the markets are telling us that pricing is going to go up, but no carrier has taken the plunge,” said Jennifer Wilson (pictured top), senior vice president, national cyber practice lead at Newfront.

“What happens is that when one of the carriers starts increasing, they’re going to start losing a lot of business because everyone else is still competitive.

“While these markets are still hungry for business, they’re going to be reluctant to increase their pricing until they’re forced to do it, and they’re only going to be forced to do it until the claims exceed the premium. So, we’re probably at least eight months away from seeing a change in the competitive market.”

The cyber insurance market ‘rollercoaster’

Wilson is among a panel of insurance leaders speaking at the Women in Insurance New York summit this September.

The in-person conference will spotlight a wide array of speakers from leading firms, tackling hot-button topics such as artificial intelligence, market trends, skills development, and fighting fatigue and burnout.

Speaking to Insurance Business ahead of the summit, Wilson gave her perspective on what’s going on in the “rollercoaster” cyber insurance market.

“We went from decades of a soft market to the hardest market in the history of cyber literally overnight,” she said.

“The pandemic invited the onslaught of ransomware claims that totally disrupted the market in a way we’ve never seen before and will never see again. It changed the way everyone viewed cyber insurance.”

Wilson noted that while cyber insurance premiums have come down significantly, ransomware attacks are increasing once more. Claims involving pixel tracking and data privacy litigations are also on the rise, putting carriers on guard.

However, Wilson thinks cyber has reached enough maturity such that it won’t regress to its earlier stages of rapidly inflating rates.

“I don’t think we’re ever going to go back to where we were post-pandemic, because the underwriting process has focused on the network security controls in a way it didn’t before, and [underwriters] are never going to let go of that now,” she said.

“As long as they continue to focus on [controls], I don’t think we’re going to be in that upside-down space again.”

What’s the biggest challenge for cyber insurance brokers?

The highly dynamic and constantly evolving nature of cyber risk makes the cyber insurance market a significant challenge for brokers, who need to stay abreast of the latest trends and see how the market responds.

“A challenging part of it is that the cyber policy form is not standardized. Every single insurance company has their own form with their own terms and conditions, and they all define things differently,” Wilson said.

“As these risks emerge, the carriers are amending their policies to try to insulate their exposure to the claims that will follow. We are talking with the market constantly trying to stay on top of things, and just as we get a handle on it and educate our clients, who start to implement and invest in mitigating those risks, a new risk comes along, and we have to start the process over.

“It’s just a constant cycle of educate, understand, translate, and move on to the next change.”

However, this is also what makes this sector so exciting for Wilson, who has more than 26 years’ experience in insurance.

“The constant evolution that makes it so interesting, because it’s impossible to get stale in this industry,” she said.

“I’m always reading up and always having to educate myself, grow and stretch. It’s impossible to become complacent.”

Register for the Women in Insurance New York Summit and boost your knowledge in the latest market trends in insurance. The annual conference is set for September 21, 2023.

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