Beazley stresses ‘account-by-account’ cyber approach
Beazley has sent a note to brokers outlining its “account-by-account” approach to implementing rate rises in the hardening cyber insurance market, this publication understands.
In the missive, the lead cyber insurer highlighted the need to adjust rates because of the rise in frequency and severity of ransomware claims.
“Given this changing risk landscape, we need to increase rates to account for the shift in underlying exposures. To do this we are anticipating pricing increases.”
“This will be done on an account-by-account basis and will include one or more of the following: premium increases, renewed focus on risk selection and underwriting the key exposures, [and] potential limit reductions,” the carrier said in the note.
The underwriting action from lead cyber markets including Beazley is being closely watched as the wider cyber space embarks on a major reassessment of exposures in response to surging ransomware claims and swelling loss ratios.
The carrier did not go so far as to state rate increase expectations or its intentions to include sub-limits on ransomware, which are among the actions outlined to brokers by fellow market leaders AIG and Chubb in recent weeks.
Yesterday, Inside P&C revealed the raft of measures Chubb is undertaking, including rate rises of as much as 50% on large corporate accounts with revenue of up to $1bn, and 40% pricing increases on mid-market business.
AIG, another lead cyber market, is understood to have introduced co-insurance and ransomware exclusions at 1 January renewals, and is pushing for rate increases of 30% to 50% across its book of business.
In the broker note, Beazley reiterated its stance that preparing for and preventing breaches has become “inseparable” from insuring cyber losses.
The carrier in 2017 established a cyber risk advisory and breach response firm, Lodestone Security, which is led by CEO Frank Luzsicza. In the broker note, Beazley said it had invested in a number of tools, such as scanning software to help clients better identify and correct vulnerabilities, particularly around ransomware.
According to a Beazley report published in December last year, the cost of digital ransom payments made during the first six months of 2020 doubled, compared with the same prior year period.
As previously reported, the cyber market is heading for a year of substantial rate rises as the market embarks on a wide-scale repricing of the risk.
Excess cyber markets are watching the actions of lead cyber carriers closely in the hope of obtaining the momentum necessary to further tighten terms and conditions and push harder for rate rises across most accounts.
Market participants speaking to this publication described a significant reduction in appetite from lead cyber insurers at 1 January and said West Coast MGAs were becoming more visible, stepping in to fill gaps left in programme towers.