Experts forecast cyber rate increases of up to 5% for 2018
Despite a series of high-profile cyber breaches, Willis Towers Watson P.L.C. said Tuesday that experts forecast cyber insurance rate increases of up to 5% for 2018.
The prediction was based on findings from Willis Towers Watson’s report 2018 Marketplace Realities Report: Cyber Risk, which also noted that total annual cyber premiums are set to climb through next year. Industry observers expect total premiums, which are around $2.5 billion now, to reach $10 billion by 2020, the report said.
“Where organizations have demonstrated increased levels of security and internal policy controls, underwriters have offered premium decreases. Increased competition in the marketplace has also been a factor,” the report said.
Cyber attacks have made the headlines repeatedly in the last few years, as hackers have hit such high-profile companies as Equifax Inc., JP Morgan Chase & Co. and Home Depot Inc.
Willis Towers Watson said that middle-market clients, or those with annual revenues below $1 billion, are still seeing a competitive marketplace with aggressive pricing and broad policy language, as many insurers seek to enter the space.
The report said that more markets are looking to address gaps in property, general liability and special crime coverage to include perils arising from cyber exposures, and that certain markets are beginning to blend cyber and property coverages.
“We are also seeing an expansion of cyber coverage in general,” Willis Towers Watson said. “Examples include explicit grants of coverage for ransomware and social engineering and expanded cyber terrorism coverage to include nation-state attacks.”
Willis said that insurers continue to focus on better management of limits deployed on programs, with many offering no more than $10 million on a given placement. Some insurers will consider additional limits on a case-by-case basis, the report said. At the same time, Willis Towers Watson said, there is an increase in capacity, with new U.S., London, Bermuda and Asian markets providing limits of up to $600 million.