According to Gallagher Re’s 1st View report, cyber insurance carriers continued to explore standalone cyber placements at the mid-year renewals in response to increasing pressure from reinsurers.
Gallagher’s report also noted that incumbent reinsurance markets continued to grow following improved rate and portfolio optimisation across cyber insurance risk, building on the sizeable new pro-rata reinsurance capacity which entered the market in Q4 2022.
This helped to rebalance the capacity dynamic across the sector, Gallagher Re said.
“Pro-rata renewals saw a consistent approach to gross loss ratio caps with modest increases in ceding commission (+0.5%) if merited by expectations of profitability across the 2021 & 2022 underwriting years,” the reinsurer explained.
The firm continued, “War exclusions continued to be a prominent and evolving topic driven by; commercial pressures, lack of market uniformity, reinsurer bifurcation in supporting LMA compliant language, legal and regulatory frameworks.”
Turning to the topic of aggregate excess of loss/stop loss, Gallagher Re’s report suggested that reinsureds were increasingly particular toward their preferred aggregate stop loss structure as they are “becoming more familiar” with aggregation modelled output.
Indeed, the reinsurer stated there remains a healthy demand for, and meaningful supply of, limit for this product and there was little movement in risk adjusted rates.
Concluding the cyber portion of the report, Gallagher Re focused on the catastrophe/event/occurrence aspect of the line of business.
“The occurrence product enables reinsurance buyers to access alternative rated (and non-rated) cyber reinsurance capacity,” the firm wrote.
Gallagher Re continued, “Demand has grown meaningfully in the last 12 months driven by increased comfort across attritional and large loss ratios with the perception that aggregate cover is expensive and increasing comfort with cyber event definitions.”
