US Cyber Insurance Payouts Increase Amid Rising Claims, Premium Hikes
Fri 06 May, 2022 – 10:56 AM ET
Related Fitch Ratings Content: U.S. Cyber Insurance Market Update (Rapid Premium Growth Leads to Direct Loss Ratio Improvement)
Fitch Ratings-Chicago/New York-06 May 2022: #Cyber insurance has become the fastest growing segment for U.S. property/casualty (P/C) insurers as evolving threats have boosted demand for coverage, with insurers actively raising prices in response to rising claims, Fitch Ratings says.
Cyber incidents continue to grow rapidly amid widespread proliferation of ransomware events. Cyber supplement data show reported claims rose by 100% annually in the past three years. Claims closed with payment grew by 200% annually over the same period, with 8,100 claims paid in 2021.
Premium rates for cyber coverage skyrocketed in 2021 in response to expansion of claims activity and cyber incidents, with prices increasing at a pace considerably higher than other commercial business lines. Cyber insurance direct written premiums grew by 74% in 2021 to over $4.8 bil., according to statutory financial data from the “Cybersecurity and Identity Theft Insurance Coverage Supplement.” Premiums for standalone coverage increased by 92% to over $3.1 billion for the year.
The industry statutory direct loss plus defense and cost containment (DCC) ratio for standalone cyber insurance dropped to 65% in 2021 from 72% in 2020 but remains well above the 42% average loss ratio for 2015-2019.