Experts predict ‘large jump’ in cyber rates when market turns

Cyber buyers have been warned that insurance rates, nearing the bottom of the current soft cycle, could suddenly spike when the market eventually turns, according to experts speaking at a recent CyberCube webinar. Scott Stransky, managing director and head of the Marsh McLennan cyber risk intelligence centre, said recent renewals saw cyber insurance rates continue to decrease, despite expectations that rates would tick up again towards the end of 2024. “It’s a buyer’s market,” Stransky said. But asked about predictions for the cyber insurance market, Steve Ridley, cyber insurance expert and consultant, said: “I don’t think it’s going to take much to turn that dial… we’re very much approaching the bottom of the rates we’ve seen eroded over the last 18 months or so.” He added: “When we do hit that inversion point, it’s going to be quite an acute one. I don’t think we’re going to suddenly hit a bottom and then kind of plateau and have a period of consistency. When there is a turn in the market, it will be a large jump in rates and changes in terms.” While not expected to be as extreme as the hard market turn in 2021/22, Ridley said buyers will see a significant increase in rates. Stransky said the current buyers’ cyber market has seen companies secure higher limits, as well as lower rates. “Nearly a quarter of our clients in recent renewals increased their limits,” he said. But many cases, limits still “aren’t sufficient for the risk that’s out there today”, he added. It will take a big event that causes a lot of insured loss to harden rates, Stransky said. “I don’t think it will be a large event on its own [that turns the market]. We’ve seen some large events, such as CrowdStrike, CDK and Change Healthcare. I think it will be when we see attritional kinds of losses change as well,” Ridley said. Dan Palardy, chief actuary at Cowbell, said it is important to differentiate between a cyber event that causes a big economic loss from a cyber event that is a big loss to the insurance industry. At the same time, organisations are strengthening their cybersecurity posture, Palardy said, even within the softer rating environment. The panel agreed that current conditions in cyber “should help increase the take-up rates”. Palardy said “we haven’t necessarily kept pace” with bullish projections for growth in cyber insurance, mainly due to the softer market but also slower-than-expected penetration rates. Stransky added: “Now that rates are coming down, hopefully more companies will see the value in purchasing cyber insurance.” Slower-than-expected penetration rates in cyber characterise the SME market but stand all the way up the chain, Palardy said. Ridley agreed that lack of cyber insurance is most acute in the SME space, where cyber insurance covering 10% of SMEs in the UK is “optimistic”. But even larger companies are not necessarily buying limits they need, he added. “Since the hard market period of 2022, which attracted new entrants to capitalise on that rating environment, we’ve seen a flood of new capacity and the demand hasn’t increased at a level to match,” said Ridley. “We’re still not doing a good enough job as a market of educating customers or getting people to see the true value of cyber insurance... under-insurance is endemic across the whole sphere of companies.” He said there is an argument for more standardisation in cyber insurance and greater consistency across providers to give buyers more confidence. “Having differentiated policy language, different ways of assessing risk, different ways of quantifying what we’re doing, only adds to confusion and uncertainty, and that stops people from engaging in it,” Ridley said. The webinar followed the launch of CyberCube’s 2025 Cyber Predictions report earlier this month, which anticipates improvements to cyber underwriting data supported by science, widescale cyberattacks powered by AI agents, cross-sector partnerships and the potential for brokers to unlock growth in cyber insurance, particularly for SMEs.

Experts predict ‘large jump’ in cyber rates when market turns

The current buyers’ market could come to an abrupt end

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