U.S. cyber insurance premiums grew 10 percent in 2018 and 14 additional players began offering coverage in the sector, Aon reported in its latest study of the sector.
Aon found that 184 U.S. insurers reported direct cyber written premium to the National Association of Insurance Commissioners in 2018. That’s up from 170 in 2017.
U.S. cyber premiums reached $2.03 billion in 2018, up 10 percent from $1.84 billion the year before, Aon found. Broken down, premiums from package business rose 6 percent year-over-year, and standalone cyber premiums jumped 14 percent higher.
Similarly, Fitch found that the U.S. cyber insurance market grew by about 8 percent in 2018, down from double-digit growth the year before.
Jon Laux, Head of Cyber Analytics for Aon’s Reinsurance Solutions business, said the numbers were good, but noted the U.S. cyber market seems to be slowing down.
“U.S. insurers, [while] still achieving good average growth during the 12 months under review, were shown to be growing at a slower pace than the preceding periods, where in both 2016 and 2017 growth rates were above 30 percent,” Laux said in prepared remarks.
He pointed out that the small commercial cyber space offered a particular bright spot for 2018. Those risks, he explained, “have been highly desirable to insurers given that cyber claims frequency and severity are both lower for smaller companies.”
Aon said its direct incurred industry loss ratio in 2018 was 35.4 across all policies, with standalone and package business reporting respective results of 34.4 and 36.8. This seems to point to a highly profitable year for U.S. insurers in the cyber insurance space,. According to Aon. Loss ratios deteriorated a bit from 2017, due in part to claims frequencies climbing to 4.2 claims per 1,000 policies in 2018. In 2017, there were 3.5 claims per 1,000 policies in 2017. More ransomware, cryptojacking and formjacking claims are among the causes, Aon said.
At the same time, claims severity declined, with the average claim size at $50,401 in 2018, down from $56,688 in 2018.
Another trend that popped up: Aon said that the U.S. cyber market became more concentrated in 2018, with the top 5 cyber insurers accounting for 53 percent of direct written premiums, up from 51 percent in 2017. The top 10 cyber insurers covered 70 percent of the market, compared to 69 percent the year before.
Details are included in the fourth edition of Aon’s U.S. Cyber Market Update report: “U.S. Cyber Insurance Profits and Performance.” The study is based on data from NAIC Statutory filings.