Cyber price increases to abate, say London brokers

After two years of eye-watering price increases and a market so tight that some buyers were unable to find cover at any price, cyber insurance rates are beginning to stabilize, say brokers in London.

"There's more competition, more opportunity to increase limits, manage pricing, and negotiate on coverage," says Glyn Thoms, Head of FINEX GB Cyber & TMT at broking giant WTW. "They're all things which we didn't have this time last year. We're certainly not seeing a default premium or rate increase any more."

Thoms predicts that for the rest of this year customers renewing their existing policies will see premiums increase by somewhere from zero to 25%.

That marks a dramatic change from last year, when a wave of highly-publicized ransomware attacks spooked insurers and led to triple digit rate increases - sometimes as high as 300%.

But this year ransomware attacks have unexpectedly abated, perhaps because cyber criminals in Russia and Ukraine have turned their attention on each other since the two nations went to war, giving potential targets in other countries some breathing space. How long this will last is unclear, but in the short term it has given insurers a break and made them more risk tolerant than they were a year ago.

A group of new insuretech firms like Mosaic Insurance, Resilience Insurance and Coalition have also entered the market, competing with traditional insurers.

At the same time some buyers, dissatisfied with prices or unable to secure coverage at any price, have withdrawn from the market or put their faith in captive (internal) insurers.

Together those trends are taking the heat out of the market and giving brokers more leverage in their negotiations with underwriters.

"My expectation is everyone will be budgeting for lower rate increases next year, if not considering flat renewals or even reductions for the best performing and most mature accounts," says Simon Meech, Cyber Practice Leader at BMS Group, a broker.

Many underwriters are lowering their attachment point on coverage towers, Meech says, indicating a willingness to take on more risk.

Even so, conditions are still very different at different levels of the tower. While excess insurance is becoming more competitive, primary insurance at the bottom end of the coverage tower, dominated by well-established underwriters like Beazley and Axis, remains a more of a seller's market.

"There aren't many insurers that are keen for that low down and dirty kind of position," says Tom Quy, Cyber Practice Leader at Acrisure Re, another broker. "They're able to really charge what they want, and they will pick the risks that they want."