Agents should prepare for stabilization – or even rate increases
While 2023 saw a buyers’ market for cyber insurance, that trend is likely unsustainable due to rising claims, according to a report by Risk Placement Services (RPS).
Agents should prepare themselves for stabilization or even rate increases, RPS warned.
During 2023, “insurers started taking rates back down with less than a year of favorable claims data,” said Steve Robinson, national cyber practice leader at RPS. “A lot of that was newer players that were accustomed to huge revenue from rocketing rates and higher policy take-up.
“Investors that had backed some newer players in 2019-2022 were asking why their investments were not growing as fast anymore, and markets responded by reducing rates to capture market share – but that was counter to everything the market knew over the last three years,” Robinson said.
Due to the volatile nature of cyber threats, cyber insurance is different from the wider P&C sector, RPS said.
“The perils facing cyber insurers are constantly changing in ways that cannot be predicted, and that means the market has to adapt quickly,” Robinson said.
The study also found that manufacturers and other industries with high exposure to business interruption risk are seeing increased underwriting scrutiny.
“The most challenging sectors for coverage placement, particularly among larger risks, are manufacturing, contractors, municipalities, and anything in the financial services sector,” said Nick Carozza, senior vice president at RPS.
RPS warned that agents should let their clients know that the low premiums currently being offered could easily change at the next renewal.
“It’s just not sustainable,” said Dillon Behr, RPS area vice president.
The study also found that while insurers have historically required control processes for insureds who want higher levels of cover, the dynamics of the market are currently in flux.
“Some carriers are being a little more flexible now, particularly for small business,” said Kunal Mallik, area assistant vice president at RPS.
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