As the cyber insurance market begins its slow-down in competitive expansion, market participants in a new PartnerRe survey are noting a trend towards higher pricing.
A joint venture by PartnerRe and Advisen, the survey took place during the second quarter of 2020 and featured 260 cyber insurance brokers and 190 cyber underwriters from around the world.
Asked to comment on the average risk-adjusted rate change over the last 12 months, most brokers indicated rate increases of between 5% and 10%, citing higher claim frequency and insurers’ improved ability to evaluate the risk.
“Seeing rate increases of 5% to 10% depending on carrier, but reasons have same nexus: Increase in ransomware claims driving claim costs,” one broker commented.
The last two years of this survey have reflected an increasingly competitive marketplace, with new entrants and lower prices, along with some concerns that pricing was too low.
PartnerRe notes how, while this has largely continued, there’s been a notable shift, with 63% of respondents feeling that the market has become more competitive, compared to 86% and 90% respectively in 2019 and 2018.
While respondents see more competition across all business sizes, increased competition is reported substantially more for small/mid-size accounts than for large/national accounts.
Asked whether or not coverage expansion is necessary to stay competitive and attract new insureds, the majority answered yes to both questions.
There was, however, lower agreement on this from underwriters, especially regarding coverage expansion to attract new insureds (only 43% agreed, compared to 68% of brokers).
For the first time PartnerRe had asked brokers who place cyber reinsurance if they have observed any notable increase in requests for various reinsurance structures or increased cessions on existing reinsurance programs.
Approximately half said they had, with similar percentages across proportional and non-proportional treaties including aggregate placements, specific non-affirmative covers and higher cessions.