The latest UK Cyber Insurance Trends Report from Marsh states that pricing in the sector rose quickly in Q3 and Q4 2021, while the market focuses on addressing systemic risk.
However, Marsh said that efforts to tackle this through exclusionary language have caused frustration for clients, while the ongoing war that Russia began against Ukraine is creating concerns that cyberattacks may continue as the conflict continues.
The firm gave its outlook for the rest of the year.
It wrote: “Increased pricing for cyber coverage, lowered capacity, and more stringent underwriting have become consistent trends across the past couple of years, and continued to affect insureds’ cyber programmes in the first quarter of 2022. As we look ahead at the rest of the year, we expect to see the cyber insurance market affected by four major trends: underwriting, limits, price and coverage.”
Marsh said that there were multiple factors driving clients to seek out cyber products. Key among them, it said, was the coronavirus pandemic and the resulting adoption of work-from-home protocols. This led, the firm wrote, to businesses evaluating and re-evaluating their approach to cyber risk in 2020. Another factor was increased media coverage around cyberattacks.
The make-up of who buys cyber insurance has also shifted, wrote Marsh. Increased technology adoption and the associated heightened cyber risk has led to a significant increase in insurance buying by power and utilities and manufacturing companies. Purchasing by more traditional buyers, such as retailers and financial institutions, has declined mainly due to capacity reductions and higher rates.
The firm also noted that average limits were down. The aviation sector — including airlines, airports, and aviation manufacturers — experienced the most significant limit reductions — a drop of 19%, from a £120m average in 2020 to £97m last year — while limits in communications, media, and technology (CMT) were down 15%, from a £97m average in 2020 to a £82m average in 2021.
Data breach continues to be main driver of claims in the UK. Data breach and ransomware incidents continued to be the most common type of cyberattacks in 2021. Although data breach attacks have witnessed a slight decline, ransomware events increased again in 2021. The healthcare industry, CMT companies, and financial institutions are driving cyber losses, accounting for 58% of losses between 2015 and 2021.