Ransomware trends are on the rise but Beazley does not see its portfolio being affected as the company is well positioned to maintain growth and deliver strong profitability, specialist re/insurer Beazley’s Paul Bantick said on a call held with JP Morgan analysts.
Bantick, Global Head of Cyber & Tech at Beazley, said the frequency and severity of ransomware claims in the wider cyber industry is broadly in line with Beazley’s expectations.
The Russia/Ukraine conflict subdued the frequency over 2022 as activity was redirected towards the conflict but this is expected to normalise again over time, Bantick noted.
According to the latest data as of May-end, Beazley does not expect any increase in ransomware claims in its book so far. This could be attributable to the reductions that the company made in exposure, underwriting actions taken and investments in its cyber ecosystem during the past two years.
In recent months, one of the major areas of debate around cyber insurance has been the introduction of updated war exclusion clauses to take into account the current risk backdrop including state backed attacks that may not have traditional war-like characteristics.
In the Lloyd’s market, all participants are incorporating the revised war exclusions into their policies. However, certain players in the US are delaying their decision on how to handle cyber war exclusions. As a result, this situation is causing temporary challenges in the market competition.
The analysts said that after the conversation with Bantick it became clear that the number of carriers not using similar wordings to update cyber war exclusions is becoming a less material part of the market. To ensure consistency on this topic, the reinsurance market is also keen on new wordings.
“Market pricing has stabilised but remains at good levels. Pricing in cyber remained positive as of 1Q23 but this is a relative stabilisation after the rapid increases we saw in recent years.”
As rates have increased significantly in recent years, Beazley anticipated that pricing would flatten in 2023.
Although there have been discussions about cyber pricing decreasing in higher layers, Beazley primarily operates as a primary insurer. In the challenging market conditions, there has been a significant upward shift in excess pricing, with some observed increases exceeding 100%.
According to Bantick, the company anticipates achieving a combined ratio in the low 80s over the long term. However, he acknowledges that the market conditions can influence the company’s performance, and there may be occasions when Beazley surpasses this level, as demonstrated in 2022 when it achieved a cyber combined ratio of 79%.
As reported in the mainstream media, the recent MOVEit cyberattack by Russian cyber crime gang Clop has affected more than 100,000 staff at the BBC, British Airways and Boots as they have been told their payroll data may have been taken.
Beazley is a major player in the cyber insurance market, so were this event to become an insurance one, the company might be affected.
