Cyber Keeps Surging, Says Fitch
Cyber insurance coverage is one of the insurance industry’s fastest-growing segments, representing a “significant growth opportunity” for US property and casualty insurers, according to a new report by Fitch Ratings.
Stand-alone cyber direct written premiums spiked by 7% to $986 million in 2017, according to the report. Stand-alone and package cyber premiums combined grew 54% to $2 billion.
The industry statutory direct-loss ratio for stand-alone cyber insurance dropped to 35% last year from 43% in 2016 – a result indicative of strong underlying profitability in the cyber market, according to Fitch. However, Fitch also warned that at some point, as cyber underwriting exposure grows, more cyber incidents will be covered, generating greater claims that lead could weaken results.
The report noted that about 75 distinct insurers wrote over $1 million each of annual cyber premiums last year. But one insurance executive who has made a fortune by often going against prevailing trends, Warren Buffett, is not jumping in. “I don’t think we or anybody else really knows what they’re doing when writing cyber insurance,” said the chairman and CEO of Berkshire Hathaway Inc. “We don’t want to be a pioneer on this.”