New Fitch Ratings Report
Chicago, IL (June 26, 2017) – Cyber insurance direct written premium volume for the Property/Casualty (P/C) industry grew by 35% in 2016 to $1.35 billion, according to a new report from Fitch Ratings. For the second year in 2016, annual P/C insurer statutory financial statements include the Cybersecurity and Identity Theft Insurance Coverage Supplement, which provides helpful insights on cyber underwriting activity and performance for insurers. Fitch notes that the $1.35 billion figure likely underestimates the industry’s cyber premium exposure as there are inherent challenges to breaking out cyber related premium from other coverages in multi-line coverage products.
“Take-up rates for cyber insurance are increasing with frequent reports of computer hacking incidents, including: network intrusions and data theft, as well as high-profile ransomware attacks that are leading corporations to search for broader insurance protection against cyber threats,” said Jim Auden, Managing Director, Fitch Ratings.
The industry statutory direct loss ratio for stand-alone cyber insurance improved in 2016 to 45% from 50% a year earlier. However, the ultimate profitability of the P/C industry’s cyber insurance efforts will take some time to assess as the market matures and future cyber-related loss events emerge.
“Future growth in cyber premiums will likely come from more consistent polity terms and conditions as insurers gain better understanding of loss potential and coverage, better cyber underwriting models, as well as efforts to comply with increased cyber regulatory standards across numerous industries, particularly financial institutions,” added Auden.
The largest cyber insurance writers are American International Group, Inc., XL Group Ltd, and Chubb Limited. These companies had a combined market share of approximately 40% at year-end 2016. The top 15 writers of cyber held approximately 83% of the market in 2016. However, over 130 distinct insurance organizations reported writing cyber premiums for the year.
The report, “U.S. Cyber Insurance Market Share and Performance (P/C Insurers’ Cyber Premiums Climb in 2016),” is available at www.fitchratings.com.
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SOURCE: Fitch Ratings