Gallagher Re’s global head of cyber Ian Newman has questioned whether the cyber risk market will ever be short of capital, in a white paper examining the broader implications for the industry.
“The principal ingredient required for softening a market is an oversupply of capacity, but cyber has to date not experienced an oversupply – if anything there has been a competitively priced shortage,” he added.
The paper also flags the capacity shortages continuing to increase the pressure on underlying carriers to deploy capacity efficiently.
Seb Plummer, a cyber reinsurance broker at Gallagher Re, and one of the authors of the white paper, said, “While the rest of the insurance market may be talking about a hard market, cyber is undoubtedly experiencing one.”
“So for those toying with the idea of entering or growing into the cyber market, it would be natural to question when we can expect a return to soft market conditions and see the highly attractive market dynamics evaporate.
“As we adapt to new ways of working around the world, whether driven by the pandemic or broader industrial advances, the global economy is undergoing a quiet technological and cultural revolution.
“With demand for cover surging, significant rate increases being seen across the board, and cyber as a class continuing to perform profitably despite rising attritional losses, capacity is undoubtedly under pressure. But for capital providers, the classic supply and demand imbalance that has arisen has uniquely positive consequences.”