Jay D'Aprile’s Post

It's going up, it's going down and it's stable? The cyber insurance market is not quite sure where its going. The AM Best industry rating agency has said there are enough positive factors to give the cyber insurance market a 'stable' outlook, with the potential for growth. Recent cyber insurance predictions highlight GWP of over $25 billion by 2027. The challenge cyber insurance has always faced is the growth in frequency, severity and impact of cyber attacks, that has driven an industry reaction to coverage limits and exclusion clauses. However, there's a difficult line to draw between balancing premiums, attack frequency and complexity, poor cybersecurity maturity and the cyber coverage gap that's getting bigger. A balancing act that is becoming increasingly difficult for the insured, as cyber regulation pushes cybersecurity risk management 'left of bang', towards an investment rather than a cost. Cyber insurance is an important tool in the risk transfer portfolio for organisations. However the challenge for cyber insurers has always been for the insured companies to see cyber insurance in the context of the whole risk transfer equation both 'Left and Right of bang'. Rather than a 'Right of Bang' risk mitigation tool and cost. A challenge Veritas GRC cybersecurity risk management programs address. Thaddeus Dziekanowski Brian D. McCarthy Veritas GRC AM Best #cybersecurity #cyberriskmanagement #cyberinsurance

I remain concerned for small businesses and ICs who will be told (by their customers looking to transfer risk) to buy expensive policies that will not truly protect them - and to get said policy will be required to spend big money on assessments and unnecessary tools that would not be necessary but for the fact that the entire model is designed for larger enterprise models. Not suggesting it is nefarious but rather the skillset to solve for it is lacking in the insurers and not incented in the cyber assessment/sales of all things cyber market.

Things don’t happen……..until they do happen! 2024 was being a good year for cyber insurance with a soft market and plenty of capacity available. Recently, a #CISO from a large electricity and gas #utility shared with me that they didn’t see the urgency for Cyber Risk Quantification and Management because they just were able to procure protection with increased limits and reduced premiums. Brace for impact for 2025! Burns & Wilcox $1bn lower end estimation of insured loss from global the recent IT outage in the Financial Times article below may be too optimistic. Just Delta Air Lines has cancelled more than 5,000 flights and it seems to be under federal investigation by the U.S. Department of Transportation. Stock markets, hospitals, government offices impacted, ……. We are seeing just the tip of the iceberg. Insured losses, full impact through the entire insurance and reinsurance industry including recent cyber CAT bonds will be known and understood in the months (or years) to come. This event will test event definitions, triggers and rest of the T&C for all the products, and we will have an additional data point on cyber risk accumulation. 50% of cyber risk is still transferred to the reinsurance market. If that market suffers, the primary market will see the impact immediately. Do not wait to be in the news. Certainly not a cyber attack but a cyber risk/exposure. Understand now your cyber risk. Understand now your main exposures. Understand now how to mitigate your cyber risk. Understand now if you can afford the cyber risk that your company's balance sheet carries. Be prepared to buy affordable protection in a hard market, not just when the wind blows your way. #CyberRisk #CyberRiskManagement #CyberInsurance #CyberRiskQuantification #CRQM

This report from Swiss Re seems to show the cyber insurance market is cooling down and market optimism maybe to.........optimistic. Does this tell us anything about the challenges companies face with risk management and risk transfer, and the take up of cyber insurance as a risk transfer tool. Especially at a time where cyber attack frequency, complexity and severity continue to rise unabated. Swiss re highlights the cyber risk gap is significant. Indicating the gap between insurance coverage and the full costs of a cyber incident on covered companies is increasing. Presenting covered companies with a risk transfer problem, namely cyber insurance isn't covering the full risk of a cyber attack. Something one has talked allot about. Swiss re points to the SME market as a growth opportunity. It is a critical market, SMEs deliver necessary products and services to larger companies. It is a market where companies are least likely to be able to afford to implement cybersecurity solutions, access appropriate resources or have the money to spend on cyber insurance. SMEs also need the help and support to understand and manage cybersecurity risk. Without which they cannot afford to cover the insurance gap and will find it difficult to survive a cyber attack. As one has said many times, cyber insurers have an opportunity to deliver products and services to enable risk transfer. Thaddeus Dziekanowski Brian D. McCarthy Faisal Khan Veritas GRC Swiss Re #cybersecurity #cyberriskmanagement #cyberattacks #cyberinsurance

🌐 Cyber insurance market on the rise! 💼 The cyber insurance market is rapidly evolving and expanding at an impressive rate. With the sector experiencing a compound annual growth rate of 17%, it's on the brink of rivalling the property reinsurance market within 15 years. However, this promising trajectory requires continuous capital investment to sustain its momentum. 📈 In recent years, fluctuations in the cyber insurance landscape have posed challenges, particularly in terms of managing aggregate accumulation risks. Significant losses and sharp rate increases have been observed in the past, yet the market has started to soften with new players entering the field. To navigate these waters, it's essential that insurers and reinsurers stay focused on long-term stability rather than short-term gains. This calls for better risk models and a concerted effort in managing aggregate accumulation. 🛡️ Peak Re is committed to fostering the growth of the cyber insurance market by providing the necessary capital support and expertise. The team, comprising actuaries, legal experts, cybersecurity specialists, and underwriters, continually works on refining cyber risk models and accumulation management strategies. The journey ahead is full of opportunities, and with sustained capital investment, the cyber insurance market is well-positioned for robust growth and resilience. #CyberInsurance #CapitalInvestment #RiskManagement

In 2023, the U.S. cyber insurance market saw slower growth, stabilized premiums, improved profitability, increased competition, evolving coverage, and a focus on proactive risk management. These changes indicate a maturing market adapting to evolving cyber risks and insurance needs.

The latest cyber insurance report from AM BEST paints a positive picture of the global cyber insurance market, which continues to evolve and thrive in a dynamic risk environment. With a Stable Outlook for 2024, the report highlights several promising trends: - Growing Demand: As awareness of cyber risks increases, so does the demand for insurance coverage. Companies are recognizing the importance of robust cyber security, driving steady growth in the market. Improved Cyber Hygiene: The industry is seeing continuous improvements in cyber security practices, leading to better risk management and reduced losses. - Profitability on the Horizon: Enhanced underwriting practices and policy language are setting the stage for sustained profitability in the intermediate term. - Supportive Reinsurance Market: The reinsurance sector remains strong, with innovative solutions like insurance-linked securities (ILS) expanding capacity and supporting market growth. - Despite challenges like increased competition and the ever-growing sophistication of cyber attacks, the outlook remains positive. The cyber insurance market is maturing, with insurers and reinsurers working together to meet the rising demand and manage risks effectively. AM Best is assigning a Stable outlook for the global cyber insurance segment owing to the following factors: • Greater demand/favorable intermediate-term growth prospects as take-up rates steadily improve • Continuously improving cyber security hygiene • Expected profitability over the intermediate term • Improvements in underwriting practices and policy language • Supportive reinsurance market and recent access to alternative risk transfer products such as insurance-linked securities (ILS) Key countervailing factors include: • Increased competition and modest premium growth in US, perhaps a sign of what’s to come internationally • Growing sophistication of attacks using AI, as well as ransomware and business e-mail compromise • Aggregation risks from widespread use of cloud computing and essential software with large footprints across geographies and industries • Model risk and divergence among models • Heavy dependence on reinsurance Excited to see the continued innovation and growth in this space! #CyberInsurance #RiskManagement #CyberSecurity #InsuranceInnovation #AMBest #CyberRisk Cyberwrite

#Cyber #Insurance Premium Growth Levels Off for U.S. P/C Insurers. Cyber again generated strong profits for U.S. property/casualty (P/C) insurers last year, Fitch Ratings 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,’ #Cyberinsurance 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. ‘#Cyberloss 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 #databreaches.’ https://lnkd.in/eV2kRc2B

Demand for cyber coverage again generated strong profits for U.S. property/casualty (P/C) insurers last year. However, weaker pricing led to the first decline in direct cyber written premiums since cyber-specific premium data were included in statutory financial statements. Learn more in our new U.S. Cyber Insurance Market Update: https://ow.ly/m0hA50RNXuV #FitchRatings #Insurance #CyberInsurance

Actually, inability to accurately estimate maximum probable losses in the face of increasing frequency and severity of systemic cyber attacks will produce lower and lower underwriting profits. Hopefully, 2025 sees fewer insurers selling cyber insurance … and, at least, not covering systemic cyber attacks (based on how each insurer defines systemic cyber attacks).