Fitch Ratings reports that US cyber insurance premium rates continue to decline for the third consecutive quarter. Premiums are expected to remain under pressure unless a major cyber event occurs. In 2024, cyber insurance remained profitable. However, direct written premiums fell for the second year. The drop stemmed from reduced rates and fewer active policies.
Carriers are struggling to maintain underwriting discipline. Increased competition and rapid tech developments like artificial intelligence make risk management more complex. Claims are now more affected by technology than by legal or regulatory shifts.
Volatility Expected in Cyber Insurance Market
Fitch warns that the market will stay volatile. Shifting coverage limits, changing terms, legal factors, and rising threats will keep the environment uncertain.
Executives are still worried about cyber risks. This concern may boost demand for cyber insurance. However, coverage levels differ widely across industries and company sizes. Large firms usually carry cyber insurance. Smaller companies, however, often lack adequate protection.
Profitability Data Remains Incomplete
Public data doesn’t show the full picture. Statutory reports exclude many key expenses. They also leave out reinsurance impacts, though most cyber policies are reinsured. As a result, total profitability remains unclear.
Growth in Cyber ILS Market Faces Challenges
The cyber Insurance-Linked Securities (ILS) market has grown rapidly. It now represents 2% of the $51 billion 144a ILS market. Yet, investor adoption is slow. Modeling cyber risks remains a significant hurdle. Unlike natural disasters, cyber risk models are still immature.
Revised Filing Categories Introduced
Filing rules have changed. Cyber premiums are now split into primary, excess, and endorsement. This replaces the former standalone and package categories. Despite the change, total premium data remains comparable.
Fitch will release more detailed US Cyber Insurance Premium results and insights in a full report this summer.
Other News: What? Cyber Insurance Premiums Dropped For First Time in 2023: Fitch(Opens in a new browser tab)
