Cyber/E&O premiums are starting to level off. While Cyber remains a challenge for policyholders and brokers, the average annual premium increase was 20%, down from 27% in Q2 2022 and down significantly from the record high in Q4 2021 of 34%. New entrants into the marketplace has created roughly $50 million in new excess capacity and generates further competition among carriers, resulting in premium relief. Additionally, the increased risk controls required by underwriters should help stabilize the rate environment.
We are still concerned for policyholders, however, and believe the markets are looking for higher deductibles and reduced sub-limits to ransomware and cyber extortion coverages, even for companies who have clean loss history.
Further contributing to the “softening” environment is the declining cyber incident frequency (specifically, ransomware attacks), with incidents falling from peak levels. The moderation in ransomware attacks can likely be partially attributed to the Russia / Ukraine conflict, where threat actors have shifted their focus. As shown below, E&O / Cyber pricing has largely trended downward. In short, while baseline pricing remains significantly higher than in the same period 2 years ago, renewal increases are declining, with some clients experiencing flat to declining rates where over-corrections were made in 2021 and 2022.Back to Resources