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The cyber insurance market, which hardened in 2021 and 2022, is showing signs of softening. However, industry experts believe the marketplace dynamics are more nuanced than they appear.
Why it matters: Lower cyber insurance premiums for some customers might not reflect recent cyber losses. There’s an ongoing industry debate about whether this is truly a soft market.
- In a soft insurance market, many insurers compete for business, and premiums are typically lower.
What they’re saying: Experts at Zywave’s Cyber Risk Insights Conference shared differing views on the current market dynamics.
- Florence Levy, executive vice president of CRC Cyber: “I think it’ll be a soft market for a while, but I can’t see a future where all these different types of incidents are not cumulatively having an effect on the insurance industry.”
- Petra Strojilova, deputy head of WTW’s North America cyber practice: “We’re seeing a lot of our clients who dropped limits during the hard market start to pick those limits back up as the pricing becomes more competitive.”
- Michelle Chia, chief underwriting officer for cyber at AXA XL: “There’s an argument that maybe we’re not quite in that soft market that a lot of people are determining this current condition to be in, perhaps frequency may have decreased in certain pockets.”
What to watch: The cyber insurance industry has had a few near misses this year.
According to reports, Change Healthcare, the victim of a ransomware attack, did not carry cyber insurance. Neither did Delta Airlines, who canceled 7,000 flights due to a flawed security update pushed by CrowdStrike.
- Long-Tail Events: Incidents like the CDK Global attack and CrowdStrike outage are still unfolding and could affect insurers’ profitability.
- Claim Frequency: Steady compared to previous years but with potential for adverse development in the future.
Looking Ahead: Experts say any premium correction will take months, with potential rate flattening in the second half of 2025.
