This article from Cyber Risk Insurer describes how Guy Carpenter’s Erica Davis, Global Co-Head of Cyber, and other industry leaders at the NetDiligence Cyber Risk Summit discussed conditions in cyber connected with January 1 renewals.
Erica explained how the 2024 renewal cycle was different not just from 2023, but also from 2021 and 2022.
“At January 1, 2024, we definitely saw a shift toward this being more of a buyer’s market on the reinsurance side,” she said. “We have scale now and maturity in the market.”
Guy Carpenter estimates cyber gross written premium globally at around USD 15 billion, which is a much larger market than just 5 years ago, she continued.
“With that, you start to gain a more credible view of how the market and individual portfolios are performing,” Erica explained.
Guy Carpenter’s analysis shows that ultimate loss ratios have been 50 percent or lower for all years other than 2019 and 2020, not inclusive of catastrophe loads. Erica described this as “really strong” portfolio performance. Since 2020, the portfolio performance has improved, she explained, which has led to a lot more capacity entering the market.
“As a result of that performance improvement, we also saw cessions begin to reduce, which created additional capacity,” she added.
Davis explained that some insurers are more willing to take on the attritional risk now that they have a better understanding of how their portfolio works. She also highlighted that there were premium misses across the market last year, as expectations that big rate increases would carry on into 2023 fell wide of the mark. This also resulted in additional capacity being available.
“That all led to a hungrier market,” Erica said. “On the quota share side, we did see increases in ceding commissions that averaged about 1 point across our client base, and selected cases of loss ratio caps increasing again as a result of the settled rate environment. And on the non-proportional side, attachment points and rate on line (RoLs) decreased. So, overall, a much better story for the buyers.”