Cyber pricing hardens over 30%, says Aon

The global giant detailed in its Global Markets Insight Report for Q1 that geopolitical events in Eastern Europe had served to exacerbate and complicate matters for the UK cyber insurance landscape.

Cyber continued to be the most challenging line of business, experiencing a further reduction in capacity and the application of exclusions as well as the increase in pricing, Aon detailed.

According to the broker, the pool of capital has continued to reduce with insurers cutting aggregate limits. This, it said, had been felt even more keenly at Lloyd’s where some syndicates have been constrained on premium income growth through the business planning process.

With underwriting becoming more vigorous and stringent than ever many underwriters are demanding evidence of risk improvement measures before giving a renewal quote, Aon continued.

Future

Looking ahead the company predicted that current market conditions will continue and may become more challenging.

The report also tackled automobile, casualty/liability, D&O, employers’ liability, property and trade credit.

Trade credit stood out as the only line to see softening in pricing with underwriting labelled flexible and limits increasing.

The slight reduction in pricing was put down to favourable portfolio development and there remains sufficient capital for most risks, Aon reported.

However it warned that a deceleration of economic growth linked to the ripple effects from the geopolitical events in Eastern Europe such as trade and supply chain challenges – combined with the high inflationary environment – may lead to more pronounced shifts in appetite and underwriting approaches.

Property

The price rises in all the other lines were calculated at 1%-10%.

Beyond cyber, property was the only other sector where underwriting was set as rigorous. The line is also seeing more restricted cover.

Prices are still rising but not as fast as before, especially for those that have had rises in the past few years, Aon listed. The larger increases were focused on policyholders leaving long term arrangements, certain industry sectors – such as food, waste and heavy trades – and those suffering losses that could not show improvements in risk management.

The demand for information from underwriters has been a clear trend throughout the hard market and continued in Q1, Aon said but noted limits were generally stable in most areas.

Similarly, there was enough capacity to meet existing demand but insurers were being selective. This lead to competition in some areas and the challenge of finding enough cover in others, Aon continued adding that new insurers coming into the market was helping to offset capacity gaps.

“Market conditions are expected to continue to stabilise compared to previous years,” Aon predicted. “Rate adjustments will remain but will be moderate relative to prior adjustments.”

On motor it flagged: “Although claims inflation remained a challenge in Q1, stable market conditions continued. Insurer appetite was healthy for well-performing risks.”

Aon’s Q1 2022 Market Dynamics Outlook - UK

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