Insurer Beazley Responds to Unsustainable Rates in the Cyber Market as Attacks Surge

One of the world’s largest cyber insurance firms is reportedly reducing its U.S. cyber business in order to maintain underwriting discipline and rate adequacy in the face of unsustainable rates in the cyber market.

That company, Beazley, is dealing with increasing claims and falling prices, even as competitors double down on policies covering ransomware demands and other cyberattacks, the Financial Times (FT) reported Sunday (Nov. 30).

The company recently reported that cyber gross written premiums, a measure of top-line revenue, fell 8% in the nine months to Sept. 30 to $848 million.

“There’s more claims, and they’re more expensive,” chief underwriting officer Paul Bantick told the FT. He said an increase in ransomware attacks and hackings had been driven by increasing geopolitical volatility, as cyber gangs used such tactics to incite distrust.

“What we’re trying to understand is why the market’s not reacting to those things,” he added.

While Beazley has reduced its exposure, Chubb and AIG, two of its biggest rivals in the U.S. market, have maintained or grown their books, the report added. These diverging strategies underline volatility in the nascent sector.

In spite of an uptick in claims and high-profile attacks on businesses, premiums for cyber insurance have been declining since early 2024, according to broker Marsh, because of rising competition for a limited pool of clients and increased investment into specialty insurance.

“They’re all fighting for new business,” said Kelly Butler, head of cyber for Marsh. “It’s not an oversaturated market, but there’s a limited pool of buyers.”

The news follows another FT report from last week about the insurance sector’s growing reluctance to cover AI-related risks at the corporate level.

Meanwhile, the Association of British Insurers (ABI) said earlier this month that cyber insurers in the United Kingdom had £197 million (about $259 million) in claims from businesses last year, a 230% increase from 2023.

“Cyber insurance is proving to be indispensable in today’s digital economy, protecting businesses from costly breaches, ransomware and email compromise while actively helping them prevent attacks and boost resilience,” the ABI said in a news release.

“With cyber threats escalating, demand for protection surged in 2024, [as] 17% more policies were taken out than the previous year, presenting clear evidence that U.K. businesses are prioritizing protection against evolving digital risks.”

Malware and ransomware accounted for 51% of all claims, compared to 32% of claims the year before. That shows “how increasingly sophisticated digital threats are causing more extensive damage, leading to higher payouts,” along with the support insurance offers when these attacks disrupt business, the ABI added.