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Advisen Front Page News - Thursday, February 10, 2022

Will cyber reach a rate ceiling in 2022? Maybe, but tough underwriting won't let up


Will cyber reach a rate ceiling in 2022? Maybe, but tough underwriting won't let up

By Erin Ayers, Advisen

After nearly a year of cyber insurance market changes, rates could begin to reach a level reflective of the risk sometime in 2022, but more stringent underwriting isn’t going anywhere, according to recent broker reports.

“Since corrective action was taken across the market materially beginning in Q2 of 2021, it is expected that businesses with renewals in this time period are priced more in line with current market conditions and the rate environment will begin to soften,” said Robert Rosenzweig, Risk Strategies’ national cyber liability practice leader, in the firm’s 2022 State of the Market report.

For now, however, the hard market conditions of 2021 will persist into 2022 as cyber losses continue to mount. Risk Strategies clients saw an average 89% rate increase in the fourth quarter of 2021, up from an average 60% in Q3, according to the report.

Even if rate equilibrium could be in the future, there isn’t likely to be any letup on strict underwriting and capacity remains tight. Buyers should be expecting ransomware sublimits and coinsurance unless their cybersecurity posture is considered “best in class” by insurers, Rosenzweig said.

“High-quality risks with strong cyber risk management programs in place are seeing the most favorable rates, and businesses with claims history and/or those that are lacking strong cyber controls are seeing the most severe rate increase,” he added.

Other brokers expressed similar optimism. In a late-2021 update, wholesale broker Amwins commented, “Many accounts can expect 50% to over 100% rate increases in the first quarter of 2022. We are hopeful rates will begin to level after carriers have experienced a full year of rate adjustments.”

In another industry report, the experts at Risk Placement Services (RPS) called the market changes – which include rate increases over 300% for some -- a “necessary evolution” leading to a more stable market in the future. They predicted a “better balance” of cyber coverage supply and demand into 2022.

The sentiment isn’t universally shared, however – Arthur J. Gallagher’s John Farley stated in his firm’s cyber market conditions report, “We see all the hallmarks of a hardening market, with no signs of relief as we move into 2022. We are in a place and time where difficult questions are being asked about systemic cyber risk, cyber underwriting practices and where hackers may hit next.”

Managing Editor Erin Ayers can be reached at