The cyber insurance sector is one tasked with moving as fast as the threat actors who threaten its insureds, which can make it difficult to take the temperature
of where the market stands at any given moment. Sharing her insight as cyber practice leader for Marsh in the UK, Serena France-Hayhurst (pictured right) joined an expert panel discussing the state of the market and what’s happening with regards to pricing and terms.
“Starting with rates, there have been continued rate reductions at primary and total program level at minus 8%, so nearly three-quarters of clients saw a price reduction,” she said. “We expect this to continue towards the end of the year, as insurers try to meet growth targets. On retail business, reductions can be extremely competitive and in some instances, we've seen pricing in the single-digit price-per-million in the first 50 million.
“From a wholesale perspective, rates are very competitive globally. We're seeing more interest from less penetrated regions such as India and Asia. Primary markets continue to compete to win business, even where there are claims. The increased utilisation of excess facilities is putting pressure on traditional excess insurers.”
France-Hayhurst noted that the restricted capacity available is just adding to the competitive environment. Marsh is now seeing primary markets offering larger line sizes, she said, pointing to the example Canopius set recently when it announced it can offer a limit of up to $25 million on the primary. There has also been an uptick in Lloyd’s consortia entering the cyber market, including Trium Cyber and Beazley’s quantum product. “This is quite a shrewd way to offer large tranches of capacity at a primary level but in the safety of large group structures.”
There has also been more blind-follow capacity continuing to enter the market, she said. Insurers like these indexation models, which track market performance whilst limiting overheads and she expects to see this trend increase over the next year.
“More insurers are using cross-client relationships as a method to get onto placements,” she said. “From a mid-market standpoint, now this is becoming much more competitive as more insurers have gone into that segment of business as well. We're seeing lower retentions, limits are increasing, but we're seeing premiums taking a significant haircut in this space.”
Turning her attention to the SME market, she highlighted that it’s a space in which insurers are looking to play in 2025. “We've seen new entries come into the market offering simple digital quoting with fewer questions. They're looking to integrate customer telemetry and they’re also putting that together with threat and external tests as well, she said. So, more insurers are investing in these types of tools across their portfolios.
Touching on the graph above, she highlighted the percentage change on an annual basis per quarter. “On the left-hand side, you can see the percentage changes through the hard market that really started in 2021 upwards, and then obviously that kind of peak over the course of 2021/2022, moving into a softer market phase in 2023. But over the course of this year, we've seen about minus-eight/minus-nine across the board for primary and total programs as well.”
Putting those rate undulations into perspective, she emphasised what this cyber compound rate movement looks like in reality. “If you have a premium binding in 2018 at $100,000, you can see how that premium tracked over the course of the hard market, to where we are today where that same premium would be $264,000. So, when we’re sitting in front of underwriters and talking about where the industry has come, a lot of the insurers will challenge us and say we’re back at pre-2018 rates, and we can use data like this to challenge that.”
Also interesting to see the variance of primary, top level and limit movement by industry, France-Hayhurst said. On the top level, you can see the increased limit by industry in sectors including professional services, where clients have increased their limit by an average of 10% over the past year. Likewise, in retail/wholesale, Marsh has seen much larger increases in clients actually utilising the savings that they're making and reinvesting them to increase their limits as well.
Across the board, there have been a number of limit increases, she said, but there have also been changes in the primary rate movement changes. “So, we’re just seeing that obviously, clients are looking to increase limits, but they are really seeing a change in the rate reduction as well.”
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