Reflecting on Cyber Insurance Trends of 2023

A year after projecting key cyber insurance trends for 2023, an evaluation of these predictions reveals a mixed bag of results in a dynamic market. Rate stabilization was partially accurate, scoring 6/10. While rates ceased their steep climb, the reduction in rates was more rapid than anticipated. The cyber insurance market saw geographic and segment variations, with single-digit rate reductions in Q4 2023. Additionally, underwriting standards, influenced by increased ransomware attacks, have largely remained stringent, though some relaxation occurred due to competitive pressures.

Regulatory focus on systemic cyber risk was spot-on, with a 9/10 accuracy score. Notably, the U.S. National Cybersecurity Strategy and EU’s EIOPA report emphasized managing catastrophic cyber risks. There’s a growing trend towards exploring federal cyber insurance backstops and stress testing for insurers.

The trend away from quota share reinsurance received a 6/10. The cyber risk landscape saw a shift with some insurers dropping quota share protection, though others continued with blended quota share programs. The reinsurance sector is still evolving, with a growing preference for event and occurrence-based structures.

Analytics integration scored 7/10. While significant advancements were made, complete integration across the value chain remains a work in progress. Key model updates from RMS and CyberCube have been well-received, aiding in risk assessment and policyholder education.

ILS investors’ engagement in the cyber insurance market scored an 8/10. The year saw over $500m in cyber capacity drawn from capital markets, including the launch of cyber catastrophe bonds and new index-based transactions. The foundation for future growth in this area has been set, though it remains a small portion of the overall market.

Overall, these reflections indicate substantial progress in the cyber insurance sector, with ongoing challenges and opportunities for innovation and risk mitigation in the face of growing technological dependence.