Average U.S. cyber insurance prices dipped 1.7 percent in the 2018 first quarter, Marsh said in its Global Insurance Market Index for the quarter.
This is the fourth time a decrease has happened in the sector over five quarters. Marsh said that continued capacity boosts and heavy, increasing competition in the market are among the factors driving the average downward pricing trends.
Marsh noted that prices are actually rising in sectors most affected by cyber events, but downward pressures are strong overall as investments in cybersecurity continue rising.
“As firms increase cybersecurity investments and as the privacy claims environment improves, historic pricing increases observed in 2012 through 2016 are generally unwinding,” Marsh found.
Cyber insurance pricing peaked with a 20 percent hike in the 2015 second quarter, according to Marsh. From there, the rate of increases declined steadily, and the last net increase above 1 percent was in the 2016 fourth quarter with a 1.4 percent rise. From the 2017 first through third quarter, cyber insurance pricing dipped an average 1.7 percent, 1.5 percent, respectively, before the sector booked a 0.6 percent increase in the 2017 fourth quarter.
Increasing competition in the cyber insurance market is having a wide effect on coverage and pricing. Last May, at the RMS Cyber Risk Seminar, experts from AIG and Zurich Insurance Group said that the trend is keeping pricing for coverage below where it should be. As a result, the pricing does not include an adequate catastrophe load for cyber events, with the accumulated loss potential equivalent to that of hurricanes in the property-catastrophe world.
Earlier this month, Fitch released a report finding, in part, that good results in cyber market growth combined with expanded coverage points to a risk with new capacity coming to the market. Fitch said that these new entrants are suspect because they’re rapidly growing premiums “without sufficient underwriting, claims and product expertise, setting the stage for some carriers to suffer outsized losses from cyber insurance.”