In a recent Moody’s survey, it has been revealed that cyber reinsurance prices are finally finding stability after years of significant increases.
This development comes as insurers brace for the possibility of further rises in cyber loss costs, prompting a growing number of them to seek increased reinsurance protection. The shift in this trend is a strong indicator of the overall growth expected in the cyber insurance sector.
According to the survey, 67% of respondents anticipate that cyber insurance prices will continue to rise in 2024, albeit at a more moderate pace compared to previous years.
The remaining 33% predict that prices will remain flat. Notably, regional disparities are evident, with a significant portion of US-based insurers foreseeing moderate price increases, while insurers in the EMEA (Europe, Middle East, and Africa) and APAC (Asia-Pacific) regions expect more substantial growth.
Overall, about a quarter of respondents foresee an increase in cyber reinsurance prices ranging from 2.5% to 7.5% next year.
The moderation in price increases is expected to be a result of recent surges in ransomware attacks and a comprehensive reevaluation of cyber risks across the insurance sector.
Additionally, improvements in performance observed in 2022 have contributed to an increase in reinsurance capacity. This boost in capacity is driven by enhanced guidelines promoting stronger cybersecurity practices and better information sharing within the industry.
Furthermore, the survey reveals a significant uptick in demand for cyber reinsurance. Unlike other property and casualty insurance lines, 35% of primary insurers express their intent to purchase more cyber protection in 2024, marking a substantial increase from the 17% reported in the previous year.
This surge in demand is partly attributed to the growing popularity of standalone cyber insurance coverage.
Experts believe that the trend of rising demand for cyber reinsurance is set to continue as pricing stabilises. Standalone cyber insurance premiums have experienced a remarkable compound growth rate of 30% over the past five years.
Munich Re, a leading reinsurance company, forecasts that the total volume of cyber insurance will reach an impressive $33 billion by 2027. Government and regulatory bodies’ increasing focus on systemic cyber risks and the imperative of information sharing are expected to further support growth in this segment.
