German cyber insurers post 124% combined ratio for 2021

German insurers lost money on cyber insurance for the first time in 2021 as claims outstripped still rapidly growing premiums to deliver a market combined ratio of 124%, according to the German insurance association (GDV). GVNW members will not be pleased to hear the news as they gather for their annual Symposium in Munich, after suffering massive rate hikes and shrinking capacity in this critical line of business during recent renewals. The GDV figures will presumably give carriers further fuel to maintain the hard market for cyber cover and restrict coverage even for those firms with good loss records. The GDV said, however, that claims fell significantly in the first half of this year despite what it described as a “stagnant” IT security environment, particularly among smaller and medium-sized enterprises. “Hacker attacks are a growing threat to the economy, new figures from cyber insurers show. In 2021 they had to settle significantly more claims, and expenses even exceeded income for the first time. However, the market continues to grow,” stated the GDV. More cyberattacks on the German economy in 2021 meant that the country’s cyber insurers slipped into the red for the first time last year. “The bottom line is that the claims/expenses ratio was almost 124%, after 65% a year earlier,” said Jörg Asmussen, general manager of the GDV. Every euro earned in the division was therefore offset by expenses for claims and administration of 1.24 euros, he added. Overall, cyber insurers reported almost 3,700 losses from hacker attacks in the 2021 financial year. This is up 56% on the prior year. Insurers paid out about €137m – almost three times as much as in 2020 – reported the association. “Individual cyberattacks had particularly serious consequences and each led to costs in the upper single-digit-million range,” said Asmussen. The high losses appear to be driving demand for cyber cover despite rising prices and shrinking capacity. The GDV member companies recorded about €178m in gross cyber premiums last year, up 49% on 2020. The good news is that so far this year, the loss picture looks far better. “In the first six months there was noticeably less damage,” said Asmussen, who added that strong fluctuations are not unusual for a young market. “Insurers and customers are still gaining experience,” he said. And premium growth is continuing. At the end of 2021, almost 243,000 customers had cyber insurance. This is a quarter more than a year earlier. The number of contracts increased at a similar rate in the first half of 2022. “The market for cyber policies continues to grow very rapidly,” said Asmussen. Not so good news is the lack of investment that the GDV sees in IT security by German companies to combat the cyber threat. The GDV general manager called on medium-sized companies in particular to arm themselves more strongly against cyberattacks. “Attacks are becoming more and more professional and frequent, but the level of IT security has stagnated for years. Small and medium-sized companies have by no means exhausted the potential for prevention. We still see major security gaps in most companies,” said Asmussen.

German cyber insurers post 124% combined ratio for 2021

Losses won’t help GVNW members with cyber renewals

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