Loss-free cyber reinsurance rates up 20% at 1/1: Gallagher Re

Loss-free cyber reinsurance contracts saw risk-adjusted rates rise by 20% at the January 1, 2023, reinsurance renewals, according to broker Gallagher Re.

In proportional reinsurance, there was continued appetite for pro rata treaties as cyber premiums and exposures continued to grow. This was the case both on a standalone basis and where cyber forms part of composite treaties.

Reinsurers were concerned about exposure growth across their portfolios and put pressure on loss ratio caps to decrease.

Reinsurers broadly backed clients’ original war exclusions where insurers followed the guidelines in the Lloyd’s bulletin communicated earlier this year.

In aggregate excess of loss/stop loss reinsurance, there was significant risk-adjusted rate increases driven by increasing attachment points, treaty limit compression and higher rates-on-line.

Despite significant rate hardening in underlying portfolios, “market performance deterioration” on prior years of account meant that reinsurer loss picks remained stable, rather than reducing. Supply/demand dynamics contributed to a hardening environment in this space, although new entrants and growth in appetite of some markets helped to offset increases in demand,.

Finally, in the cat/event/occurrence space, there was increased interest in occurrence structures from buyers and reinsurers with a few new purchases being considered and more interest going into 2023.