Risk managers to see more favourable GB cyber insurance market in 2023

The GB cyber insurance market saw continued improvements, with increased stability and a greater frequency of competition among insurers in the second half of 2022, according to WTW. The broker says in its report GB Cyber – Cyber Insurance Update – H2 2022 that it expects existing cyber insurance buyers to take advantage of a more favourable market in 2023 to purchase additional limits. The broker says existing cyber market insurers are increasingly willing to offer more capacity and new cyber insurers that entered the market in 2022 are looking to offer larger amounts of capacity. As a result, clients often achieved flat renewals, with pricing reductions becoming more common and insurers showing increased willingness to offer alternative retention options, particularly where competition could be created. The more positive rating environment for buyers was helped by trends suggesting a reduction in the number of cyber claims in the second half of 2022, although WTW says the severity of claims was on the increase. Underwriters are still demanding detailed underwriting information, especially around cyber risk controls, and policy coverage remains under very close scrutiny, particularly in respect of systemic risk (war and infrastructure exclusions in particular). “There was increased competition from insurers to deploy capacity on both primary and excess layers, with a notable increase in the number of insurers available. This provided the option for existing cyber insurance buyers to purchase increased policy limits,” says WTW. It adds: “While companies must still show a high level of risk controls in key areas, insurers are demonstrating more flexibility where clients can provide the necessary context to explain any perceived lack of necessary controls. Insurers are adopting a ‘can do’ approach more often and are less demanding of the controls a client must have.” Looking ahead to 2023, the report suggests that further new capacity is likely to enter the cyber market, with a number of insurers identifying cyber as a key area of growth given the demand for capacity from both existing and new buyers. “We anticipate that insurers will offer bigger limits of capacity, with $10m remaining a common average and with some insurers returning to pre-‘hard market’ levels, offering limits/capacity in excess of $10m. Cyber buyers must utilise this increased flexibility and competition in order to achieve the best placement results,” says WTW. Due to the increased competition, WTW says in the report that it expects pricing to become increasingly less volatile in 2023, removing exceptionally high and/or low pricing, relative to the placement in question. It also expects that self-insured retention levels will continue to stabilise, and that an increasing number of buyers may have attractive options to select a lower retention level. Finally, WTW says: “Given the highly changeable claims trends throughout 2021 and 2022, it feels prudent to expect the unexpected, which WTW expects will result in existing cyber insurance buyers taking advantage of a more favourable market to purchase additional limits, and equally many businesses who do not purchase coverage seeking to do so during 2023.”

Risk managers to see more favourable GB cyber insurance market in 2023

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