US cyber insurers report zero premium growth in 2023

US cyber written premium reported to the National Association of Insurance Commissioners (NAIC) decreased by just under 1% to $7.18bn in 2023, the first time since the inception of the NAIC statutory filing supplement that there has not been year-over-year growth, according to Aon’s US Cyber Market Update.

The US industry loss ratio for cyber reported to the NAIC decreased by three points to 42% for 2023, driven by increases in written premium per policy from 2022 continuing to earn into portfolios and reduced average severity, said Aon, adding that frequency rose in 2023 “and will require further monitoring as declining premium per policy earns into the industry results”.

Aon said that the lack of premium growth in 2023 is attributable to a 3% decrease year over year in standalone cyber written premium, which outpaced package cyber premium, which grew 5%. The standalone loss ratio increased one point to 44%, with most standalone writers experiencing an increase, while the package loss ratio decreased 12 points to 36%.

According to the update, most standalone and package insurers experienced rising claim frequency in 2023, while claim severity dropped for standalone business. Aon said that the majority of cyber claims are first party, but noted there has been a rising proportion of third-party claims. “This, combined with evidence in the data that cyber is becoming less short-tailed in recent years, indicates that cyber may be less short-tailed than generally assumed,” said the broker.

The standalone cyber market is becoming less concentrated, continuing the trends observed in recent years, said Aon. It added: “Cyber insurance continues to experience higher volatility compared to many common lines of business; however, there was less spread in industry loss ratios in 2023 compared to prior years.”