In Lloyd’s Q2 Market Message, Rachel Turk, Chief of Performance & Strategy, warned that cyber risk vectors continue to evolve, with artificial intelligence adding a further layer of complexity and uncertainty, both through its use by threat actors and in raising emerging questions around potential coverage.
Lloyd’s has classified the cyber line of business as having a “Marginal” adequacy assessment, signalling that current rate margins are under notable pressure.
Furthermore, its forward trajectory is flagged as experiencing “Rapid Weakening”, driven by a softening market and falling rates that require heightened underwriting discipline and clearer coverage boundaries.
With the Q2 Market Message, Turk emphasised that clarity is the one lever within the market’s control, noting that it is not always clear whether underwriters intend cyber policies to include or exclude liability exposures.
She warned that this ambiguity risks creating downstream issues, and while acknowledging Lloyd’s mixed history when it comes to dictating wording approaches, she urged the market instead to self-regulate through greater consistency and transparency.
Turk continued, “Even if we put AI as a risk vector to one side, rate adequacy remains under pressure, and catastrophe assumptions in a market without the benefit of historical catastrophe loss data are widely open to interpretation.
“Uncertainty around severity and aggregation reinforces the need for conservatism as the market matures, so caution is advisable.
“We are refreshing our cyber RDS suite to reflect the ever-changing threat landscape, but I want the market to push us further, lead the way.”
