JUNE 18, 2019 08:22 AM (EDT)
AM Best Market Segment Report: U.S. Cyber Insurance Premiums Doubled in Four-Year Span; Overall Market Tops $2 Billion
FOR IMMEDIATE RELEASE
OLDWICK - JUNE 18, 2019 08:22 AM (EDT)
In the new Best’s Market Segment Report, “Cyber Insurers Are Profitable Today, but Wary of Tomorrow’s Risks,” AM Best notes that growth has slowed from the two prior years, when direct premiums written grew by more than 30%. Direct premiums written in 2018 grew by 12.6% compared with the previous year. However, according to the report, market growth figures likely are understated given that a number of organizations utilize captive insurers to write cyber coverage.
With awareness and demand for cyber coverage growing, insurers have removed cyber coverage from traditional insurance coverage by incorporating cyber exclusions. At the same time, many insurers have expanded product offerings by adding cyber endorsements to commercial packaged policies and business owner’s policies, and packaging cyber coverage with technology errors and omissions policies. This is pressuring other insurers to follow suit to stay competitive and meet the demands of policyholders. Stricter regulatory environments, led by the General Data Protection Regulation in Europe and similar state-based regulations in the United States, also are driving the market growth.
Highlights from this year’s report include:
The cyber insurance line’s underwriting performance remains strong; however, emerging new risks are a constant. Most companies writing cyber insurance remain prudent about their total exposure, and cyber exposure relative to policyholder surplus is limited. Although underpricing by new market entrants is an industry concern, a systemic event remains the top threat to cyber insurers’ solvency. AM Best still holds that cyber insurance market presents a significant opportunity for insurers. Capacity also should continue to grow, given that the line’s profitability will undoubtedly attract more new market entrants. AM Best will continue to monitor how insurers are managing their cyber insurance exposures, and whether they are taking into account sufficiently those exposures in their enterprise risk management processes. Cyber insurance growth without corresponding risk controls would be deemed credit negative.
To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=286713 .
AM Best will present a webinar, “State of the Cyber Insurance Market,” on Thursday, June 20, 2019, at 11 a.m. (EDT). During the event, AM Best analysts and market experts will explore the market growth, along with the companies that are most active in the line of coverage, the development of cyber modeling and how the insurance industry is positioned to cover those risks. To register for the complementary webinar, please visit http://www.ambest.com/webinars/cyber19 .
AM Best is a global rating agency and information provider with a unique focus on the insurance industry.