Cyber again generated strong profits for U.S. property/casualty (P/C) insurers last year, Fitch Ratings says in its latest market update report, but weaker pricing led to the first decline in direct cyber written premiums since cyber-specific premium data were included in statutory financial statements.
Cyber demand for coverage remains strong amid an evolving risk environment. However, U.S. direct cyber written premiums fell 1% in 2023, this change follows a 160% increase in volume from 2020-2022. Standalone cyber policy written premium declined by 3% in 2023, while premiums for package coverage increased by 5%.
‘Expansion in demand for cyber protection and P/C insurers’ expertise in risk mitigation and claims management has promoted strong growth in cyber insurance.’ said Managing Director Jim Auden. ‘However, market concentration has become diluted as more insurers enter the cyber market attracted by longer-term growth opportunities,’
Cyber insurance coverage generated significant underwriting profit for the second consecutive year in 2023 as the industry direct loss plus defense & cost containment ratio for standalone cyber insurance marginally increased to 44% in 2023 from 43%, according to statutory financial data. Global insurance broker Marsh indicates that US cyber renewal premium rates declined by 6% in the latest quarter. Further price deterioration will continue to promote weaker underwriting performance going forward.
‘Underwriters risk management practices continue to improve, but large incidences of data breaches, business e-mail compromises and ransomware attacks continue to present a long-term threat,’ said Senior Director Gerry Glombicki. ‘Cyber loss risk is also affected by expansion in regulatory and compliance requirements that increase potential for litigation risks and substantial fines and penalties for not properly disclosing data breaches.’