More US insurers writing cyber coverage
The US cyber insurance market grew last year with 170 insurers writing the line of business, up from 140 in 2016. Premiums also rose by 37 per cent to $1.84 billion.
The loss ratio decreased from 47.6 per cent to 32.4 per cent, primarily due to a reduction in frequency and claim severity, with the average claim size across all companies at $56,688, down from $90.865.
The data and analysis is contained in the US Cyber Market Update report by Aon plc. It noted that there has been growth in ransomware claims, with ransomware being the favoured attack method for cybercriminals.
The data also reveals a shift from stand-alone policies to package policies, with the package option seeing premiums rise by 98 per cent, compared to an 8 per cent increase for stand-alone premiums. This was reflected in the experience of Chubb, which was the leader by total cyber written premiums last year. Its stand-alone cyber premiums decreased but were offset by the rise in package business.
Jon Laux, head of cyber analytics for Aon’s Reinsurance Solutions business, said: “It is still early days in the development of the cyber insurance product, yet our study reveals that despite several significant and prolific cyber attacks in 2017, industry premium continued to increase and loss ratios continued to decrease. This is very encouraging for existing players and those looking to enter this line of business. It shows that insurers have the expertise to offer an appropriate product with first and third party coverages that firms are willing to buy.
“It also demonstrates that underwriters are structuring and pricing policies in a way that allows them to generate profit. This is a positive outlook which should give cyber insurers the confidence to remain committed to this much needed line of business.”
Aon’s report revealed that the US cyber market is still relatively concentrated, but that new entrants are beginning to have a dilutive effect; in 2017, the top 10 cyber insurers accounted for 69 per cent of direct written premiums — a reduction from 73 per cent in 2016. By way of comparison, the top 10 writers of other liability claims made insurance account for 57 per cent of premium, and the top 10 in commercial multi-peril account for 44 per cent of premium.
Aon’s study is based on data from National Association of Insurance Commissioners statutory filings, therefore does not include US business written by non-US insurers, and provides an incomplete picture of US insurers that write internationally.
• Aon’s report can be read at https://aon.io/us-cyber-2018
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