According to the study, the U.S. cyber insurance direct written premiums across both Standalone and Package cyber products had reached in 2020 USD 2.74 billion which represents more than double over a five-year period (USD 1.35 billion in 2016).
"Last year we said that we believe the next several years will be the proving ground for the cyber insurance thesis - that by putting a price on risk, insurers will help improve cybersecurity hygiene and reduce the cost of cyberattacks. This remains true. Insurers are pursuing many interesting tactics to address the claims environment, even as we see new developments opening in the threat environment. It's a fascinating time in the industry. Stay tuned," declared Jon Laux, Aon's Head of Cyber Analytics for Reinsurance Solutions.
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%).
The overall industry loss ratio increased from 2019 by 22.0 % (from 44.9% to 67.0%), 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).
Meanwhile, 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.
The study also calls for the National Association of Insurance Commissioners (NAIC) to make cyber insurance a standard reporting line in the property-casualty insurance annual statement, including Schedule P, to improve the industry's ability to identify and manage exposure.
To view Aon's 2021 U.S. Cyber Market Update, please follow the link: http://thoughtleadership.aon.com/sitepages/display.aspx?tl=1202