US cyber insurance premiums doubled over five years: Aon study
Source: Middle East Insurance Review | Jul 2021
US cyber insurance direct written premiums totalled $2.74bn in 2020, an increase of 21% over 2019’s $2.26bn across both standalone and package cyber products. The two categories more than doubled over a five-year period (2016: $1.35bn). The figures were revealed in Aon’s sixth annual edition of US cyber market update report.
Both the standalone and package segments saw their highest loss ratios since data collection began in 2015, with standalone cyber policies recording a 25.7% increase (from 47.1% to 72.8%) and package policies a 16.4% increase (from 42.3% to 58.6%).
In 2020, the overall industry loss ratio increased year-on-year by 22% (from 44.9% to 67%), primarily due to an increase in the severity of ransomware claims, which included heightened incident response costs and extortion demands. Claim frequency remained steady, averaging 5.62 claims per 1,000 policies (2019: 5.61 claims).
Cyber rates increased by 2.5% on average during the 2020 financial year. These numbers generally correspond to the period of time prior to insurers taking significant steps to address ransomware trends, including rate increases and underwriting actions later in 2020 and early 2021. M