Primary and excess cyber renewals are now averaging premium increases in the 5-10% range, driven by an explosion of ransomware losses during the second half of 2019, according to re/insurance broker Willis Towers Watson (WTW).
Analysts noted that the uptick in losses has been prompting carriers to re-evaluate their positions in large towers and look more closely at rates in perceived burn layers.
The cost of data breaches continues to increase year by year, with reputational and regulatory costs considered to be the main drivers.
“As the cyber threat landscape becomes more complex and demand for cyber security resources increases, so do the costs in remediating data breaches, particularly for large-scale events,” WTW stated in its new Insurance Marketplace Realities report.
The report observed that cyber coverage continues to evolve and expand to cover reputational damage, forensic accounting, and gap exposures.
Similarly, cyber markets have begun to more affirmatively address coverage for claims stemming from the E.U. General Data Protection Regulation (GDPR) went into effect in May 2018, and for claims anticipated under the California Consumer Privacy Act.
WTW continues to see business interruption and system failure as an area of concern for underwriters, particularly in heavily exposed industry classes such as aviation, manufacturing and transportation.
Despite concern over system failure losses, analysts noted that some cyber carriers are now beginning to offer business interruption/system failure coverage for outsourced providers that fall under critical infrastructure, which were previously considered to be a non-starter.
Additionally, cyber underwriters are increasingly working more closely with their counterparts in other lines, the WTW report found.
Cyber and property underwriters in particular are combining forces as carriers continue to expand their coverage offerings in business interruption.
Based on the historical experience of how business interruption losses play out, WTW considers this to be a natural pairing that should help cyber underwriters understand what they face in claim scenarios.
But notwithstanding this cooperation, the firm says it is seeing carriers withdraw or limit cyber coverage in non cyber insurance lines due to concern about aggregation.
