E&O, cyber ‘more buyer-friendly’ as capacity enters
The errors & omissions (E&O) and cyber insurance marketplace is becoming more buyer-friendly than a year ago, according to a report by broker Aon.
New carriers are entering the E&O/cyber insurance market, leading to roughly $50m in new excess capacity, Aon said.
Insurers, especially those with a strong historical market presence, are starting to turn back capacity management restrictions, benefiting large market cap clients.
Many middle market clients are also benefiting from less strict capacity management guidelines. In combination with more capacity from managing general agents (MGAs) that recently entered the space, this is presenting “a more competitive buyer’s market,” Aon said.
In particular, clients who can demonstrate appropriate risk management and security controls are being rewarded with more capacity.
“Within this context, the E&O/Cyber market appears to be shifting to a more buyer-friendly environment compared to 2021,” Aon said. “Businesses with mature, best-in-class cyber risk profiles may experience greater opportunity to pursue options in the market as the pricing environment improves.”
Aon’s data shows that by the middle of 2022 claims frequency had declined over 40%, year-on-year. Insurers’ results have also improved in 2022, compared to 2021.
Although pricing has increased substantially since 2020, renewal increases are declining. And some clients are experiencing flat to declining rates where overcorrections were made in 2021.
Aon also points out that many clients now have alternative risk transfer options to consider, in stark contrast to previous renewal cycles.
Coverage continues to be reviewed, most notably in the context of war exclusions, territory restrictions, systemic risk, and ancillary coverages such as media and cyber crime or theft.