Reinsurance News

Cyber loss picks stable at Jan 1 despite rate hardening: Gallagher Re

9th January 2023 - Author: Kassandra Jimenez-Sanchez

Reinsurers aggregate excess of loss/stop loss cyber loss picks remained stable at 1/1, global reinsurance broker Gallagher Re revealed in its 1st View Report.

gallagher-re-logoSharing its comments on the global cyber market at the January 1, 2023 reinsurance renewals, the broker said that despite significant rate hardening in underlying portfolios, “market performance deterioration’ on prior years of account meant that reinsurer loss picks remained stable, rather than reducing.”

Also contributing to the hardening environment, Gallagher Re observed, was the capacity demand and supply dynamic. Although new entrants and growth in appetite of some markets are helping to offset increase in demand for these types of cover.

Additionally, on cyber aggregate excess of loss/stop loss, the significant risk-adjusted rate increases that the market has seen are mainly driven by increasing attachment points, treaty limit compression and higher rates on line, said the broker.

Commenting on cat/event/occurrence cyber reinsurance programmes at Jan 1, Gallagher Re said that it saw an increased interest in occurrence structures, both from buyers and reinsurers, with a few new purchases being considered.

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The broker also predicted that this growing interest will continue into 2023.

On proportional cyber reinsurance, the reinsurance broker saw a continued appetite for existing pro rata treaties as cyber premium and exposures continue to grow, both on a standalone basis and where cyber forms parts of composite treaties.

The broker also noted that reinsurers looked more closely at exposure growth across their portfolios with pressure on loss ratio caps to decrease, especially in light of underlying exposure reductions and rate increases.

Finally, Gallagher Re observed reinsurers being supportive of following clients’ original war exclusions where strategies for this have been communicated. This following the Lloyd’s bulletin previously issued on this subject.

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