UK cyber market remains challenging; significant rate increases continue

Market conditions have remained challenging in the UK cyber insurance sector, with the geopolitical events in Eastern Europe serving to exacerbate and complicate the landscape, according to the latest analysis from Aon.

Underwriting remained time-consuming and demanding; rate increases and capacity reductions continued, while despite price adjustments at past renewals, very significant rate increases continued, the broker added.

Cyber capacity remains constrained, it added, noting that the overall pool of risk transfer capital continued to decrease due to the global focus amongst insurers on reducing aggregate limits.  Aon said this has been felt even more keenly at Lloyd’s where some syndicates have been constrained on premium income growth through the business planning process. 

Underwriting has become more rigorous and stringent than ever, the broker noted, adding that many underwriters are requiring evidence of risk improvement measures as a prerequisite to providing renewal quotes, while overall limits have continued to decrease, and ransomware sub-limits and co-insurance restrictions have been applied in circumstances where the cyber risk posture was deemed by insurers as inadequate. 

Aon said that deductible increases have continued as insurers remain focused on transitioning away from ‘working layer’ losses, which has proven in the cyber space to be a moving target. Expiring coverage terms were achieved in most cases, although coinsurance was required for risks where controls were deemed by insurers as inadequate. 

Looking ahead, the broker noted that current market conditions are expected to continue and may be further challenged depending on the impacts from the geopolitical events in Eastern Europe. 

The comments were made as part of Aon’s latest market dynamics outlook report, which can be accessed here.

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