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Reinsurers expected to absorb growing cyber accumulation risk

S&P Global Ratings says the multi-year decline in cyber insurance rates is beginning to slow as underwriting margins tighten, led by the US market.

Reported · Written up by our desk · Reinsurance

Reinsurance News reports that S&P Global Ratings expects reinsurers to remain central to the cyber insurance market’s ability to transfer cyber accumulation risk as exposures grow in scale and become more interconnected.

The report says rising cyber threats and the potential for greater damage are increasing claim costs and overall risk, while cyber insurance rates have fallen for several consecutive quarters due to abundant underwriting capacity and intense competition.

S&P Global Ratings adds that insurers have maintained underwriting discipline to stay broadly profitable, but pricing momentum is starting to decelerate, with the US market leading signs of pricing stabilisation as underwriting margins tighten.

Reinsurance News also notes that cyber insurance is heavily reinsured because risk flows from policyholders to primary insurers and ultimately clusters in the reinsurance market, where analysts say reinsurers help set underwriting standards and shape pricing and risk management.

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