Direct written premiums for cyber policies surged year over year in 2021, according to an S&P Global Market Intelligence analysis.
Premiums for stand-alone policies nearly double
The combined direct written premiums
Axis Capital Holdings Ltd. CEO Albert Benchimol in a first-quarter earnings call said cyber remains a hard market. The average rate increase in the first quarter of 2022 was almost 70%, and well in excess of 100% in some cases, according to Benchimol. The insurer grew its premiums in the segment by 60.2% in full year 2021 to $144.0 million.
Package premiums also jump
Industrywide, direct written premiums for packaged cyber insurance climbed 47.6% to $1.68 billion in 2021 from $1.14 billion in 2020. Chubb Ltd. was the top underwriter in the segment with premiums of $473.1 million in 2021, up 17.1% from $404.1 million a year earlier. The insurer reported 2,465 cyber claims in 2021.
Munich Re became the third-biggest writer of packaged cyber insurance after growing its premiums to $116.3 million in 2021 from just $1.0 million in 2020.
Chairman Joachim Wenning in a February earnings call said the increase in the premium volume for cyber comes from rate increases or installment increases, rather than an expansion of the business.
"The capacity on offer in the marketplace has gone down, no question about it," Wenning said.
Loss ratio improvement
In what may be a sign that insurers becoming more disciplined and cautious when underwriting policies, the average loss ratio for stand-alone policies fell to 65.4% in 2021 from 72.5% in 2020, even as they significantly grew premium.
Fitch Ratings analysts said cyber insurance is the fastest-growing segment for U.S. property and casualty insurers; premium rates jumped in 2021 due to claims activity and cyber incidents. Prices increased at a pace that was "considerably higher" than other commercial business lines, the rating agency said.