Is 2015 the Year for Cyber? by Andrea Wells
For several years the insurance industry has talked about a pending surge in cyber insurance sales. And while cyber insurance appears to be trending up some say that “surge” has yet to come.
That may not be the case for the year 2015, according to property/casualty insurance executives. According to a new Insurance Information Institute (I.I.I.) annual survey, P/C insurer execs overwhelmingly predict growth in cyber insurance this year.
Nearly 80 percent of survey respondents said “commercial insurers could experience major growth in cyber insurance over the coming year.” Only 20 percent of respondents disagreed with that statement.
I.I.I.’s survey of executives attending its annual Property/Casualty Insurance Joint Industry Forum in January revealed expectations for a surge in merger and acquisitions (M&A) activity as well in 2015. Also, the industry will see another growth year for equity markets, according to the survey.
However, industry leaders expect to see growth in the overall combined ratio of the P/C industry in 2015.
Reflecting concerns about federal government encroachment into insurance regulation, 72 percent of respondents said they believe the federal government wants further expansion of its regulatory oversight authority over the industry. Just 28 percent disagreed.
Cyber insurance was not front-of-mind for the P/C executives’ survey last January; rather the federal government’s flood insurance and terrorism reinsurance programs were top concerns. Then, 93 percent expected Congress to renew TRIA, which finally happened this month. Also 75 percent predicted Congress would roll back some of the rates and changes made by the Biggert-Waters Flood Insurance Reform Act, which Congress did do last March with the Homeowner Flood Insurance Affordability Act.
Other 2015 I.I.I. survey results include:
- A sizable 92 percent say M&A activity for both insurers and reinsurers will increase in 2015, echoing predictions that have been heard since late 2014.
- About 74 percent said they expect combined ratios to be higher in 2015 than in 2014, compared to 26 percent who predict otherwise.
- 78 percent of respondents said that industry capacity (as measured by policyholder surplus) will increase. Just 4 percent expect a decrease and 18 percent said capacity will remain flat.
- About 36 percent of respondents said premium growth will be higher in 2015 and 18 percent said premium growth would be lower. Nearly half – 46 percent – said premium growth will be flat compared to 2014.