Take advantage of current buyer’s market to build cyber resilience, says Aon

The global cyber liability market is dominated by competition, and capacity and pricing remains favourable as a result, according to Aon. The broker said taking advantage of the current buyer’s market to build sustained cyber resilience is the key to success.

Aon said the cyber liability and errors and omissions (E&O) insurance market has continued its nearly two-year favourable buyer’s market streak despite the global cyber threat environment remaining volatile.

However, signs of pricing moderation are appearing on the horizon and buyers should take advantage of the current market. “We recommend using saved capital to remain proactive and strengthen your organisation’s cyber resilience – and expand your cyber liability and E&O insurance programme limits now to prepare for the future,” said Aon.

According to Aon data, average North America cyber premiums in the primary market have decreased 8% in H1 2024, compared to a 22% decline in H1 2023. Cyber and E&O quarterly pricing decreased 5% percent in Q2 2024 versus an 18% percent decline in Q2 2023. EMEA primary pricing has decreased 7.2% over the same period.

Aon said that pricing into 2025 will depend on the frequency and severity of occurrences in 2024. If severity of losses is significant, pricing could harden earlier in 2025, but soft pricing could prevail through the balance of 2025 if losses are less substantial.

“We’re in a competitive environment through the end of the year and into 2025,” said Greg Sparacio, US middle leader in Aon’s cyber solutions practice. “A lot will depend on the claims that were submitted for systemic events that occurred over 2024, including healthcare events, CDK and CrowdStrike.”

In North America, buyer-friendly market conditions continue, characterised by healthy competition, abundant capacity and incumbent insurers seeking to retain renewals and potentially expand their participation, said Aon. It noted: “Insurers continued to seek underwriting data and best-in-class network security controls, but underwriters have shifted to also focus on understanding and ensuring best-in-class privacy controls and policies.”

Matt Chmel, chief broking officer for Aon’s cyber solutions practice in North America, said: “Given the amount of competition in the US, especially with larger programmes in the high excess space and middle market segment, we are seeing pressure from underwriters who need to grow their books. That’s a dynamic that is pushing against some of the current claim trends.”

In Europe, Middle East and Africa (EMEA), Aon said Q3 2024 is expected to yield further buyer-friendly market results, with a majority of savings coming from the high excess layers and increased primary competition. The broker said that as pricing continues to soften, more insureds have opted to purchase additional limits, using data and analytics to support their decisions.

“There are a number of new insurers coming into the market, which gives clients more options and flexibility,” said Søren Stryger, chief cyber broking officer for Aon in EMEA. “From an underwriting perspective, we are still seeing the same level of risk information being required by insurers. However, for renewals and long-term clients, options are much more favourable.”

Aon stressed that as cyber risks continue to evolve, companies need actionable insights and solutions to strengthen their cyber risk strategies and build sustained cyber resilience. “Exposures will change all the time. You may have improved your cybersecurity, but it is important to use some of the premium savings to reinvest for the long term and build sustainable cyber resilience,” said Pablo Constenla, head of cyber coverage and claims for Aon’s EMEA region. “This is an opportunity to think ahead to make sure you work with the right partners, coverages and policy wording.”