For the fifth straight quarter, pricing increases for cyber insurance continued to fall at the start of 2023.
According to a new U.S. Cyber Purchasing Trends report from broker Marsh, prices were up 11% in first quarter 2023 compared to up 28% during the last three months of 2022.
“The US cyber insurance market continues to stabilize,” said Meredith Schnur, US cyber brokerage leader, in a statement. “Barring unforeseen events, we expect to see continued deceleration of rate increases for the remainder of 2023, especially for organizations with good cyber hygiene and loss histories.”
As 2022 progressed, cyber insurance buyers began reversing a trend of retaining more risk and started to purchase higher limits as increases in the price for coverage has moderated. In Q4 2022, 16% of clients bought more limits, compared to 10% in Q2 2022, Marsh said. Into 2023, the use of self-insured retentions continued to drop but clients continue to keep control of cyber programs via captives. The number of Marsh-managed captive insurers writing cyber coverage increased 75% from 2020 to 2022.
During the hard cyber insurance market, captives became an “incredibly useful tool for organizations,” said Ellen Charnley, president of Marsh captive solutions.
“In some cases, organizations are funding their entire cyber risk into a captive, but more often they are using cell captives to fund different layers within their larger cyber program,” she added.
The overall take-up rate for cyber insurance continued to rise in 2022, with 36% of Marsh clients getting the coverage. Marsh said 60% of its education clients get cyber insurance – the highest among all industries, with healthcare at 56%.
“The increase in the number of organizations purchasing coverage is a positive trend, reinforcing the view that insurance is an important part of a holistic cyber risk management strategy. Buyer uncertainty still remains however – namely around war, cyber operations, and systemic/catastrophic risk exclusions – which we continue to tackle on behalf of clients,” added Greg Eskins, US cyber product leader. “Cyber insurance products need to resonate most with those who invest in cyber insurance products to protect against strategic risks.”
The broker said it “continues to question insurers on clients’ behalf” regarding coverage for cyber war and catastrophe risk following new exclusions issued this year by Lloyd’s of London.
Related: Lloyd’s Cyber War Exclusions: Confusing, Disruptive, but Necessary?
Looking in at claims trends, Marsh said the frequency of ransomware has returned following a brief lull last year compared to 2021. Ransomware-related claims rose 77% in the first quarter compared to Q4 2022. Also, privacy-related claims are up 85% over the last quarter of 2022.
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