US cyber insurance growth rate slows

Published in: Risk, Risk management, US - Canada - Bermuda, USA focus

Companies: Fitch Ratings

The cyber insurance market remains a steady source of growth for US property and casualty (P&C) insurers. However, the level of growth is stalling, according to research from Fitch Ratings.

Fitch's US Cyber Insurance and Market Share Performance report revealed total direct written cyber premiums grew by 8% in 2018 to $2bn, down from 37% year-on-year growth achieved in 2017.

Gerry Glombicki, director of insurance at Fitch, said the US cyber insurance segment "moderated" in 2018 after several years of "brisk growth".

"However, we continue to believe that high profile cyber events, desire for more sophisticated risk management and improved pricing will buoy the segment in the long term," said Glombicki.

Maintaining pace with both technological change and potential hackers is described as an "omnipresent" challenge for P&C insurers.

Profitability in the sector is strong, according to the report, as statutory industry direct losses for standalone cyber polices were "favourable", with direct loss ratios for standalone polices standing at 34% in 2018 compared to 35% in 2017. However, Fitch warned such results did not confirm similar results going forward as limited historical claims data presents challenges for new underwriters.

Outside of the US, interest in cyber risk management in Europe is increasing, partly due to the effects of the General Data Protection Regulation's introduction in 2018.

Paul Walsh