Premiums for commercial property and casualty (P&C) insurance lines once again increased in the second quarter (Q2) of 2021, led by a 25.5% jump in cyber.
Q2 marked the 15th consecutive quarter of U.S. commercial P&C premium increases—8.3% across allsized accounts, according to The Council of Insurance Agents and Brokers (CIAB) Commercial Property/Casualty Market Index.
Spotlight on Cyber Lines
Increases in all lines of business, except for cyber, again tapered off compared to previous quarters, according to respondents of the CIAB survey.
“Carriers continued to approach writing cyber risk with caution in Q2 2021,” Ken A. Crerar, president and CEO of CIAB, said. The surge in Q2 cyber premiums follows increases of 18% in Q1 and about 11% in Q4 2020.
A rise in frequency and severity of cyberattacks— driven by ransomware—as well as poor risk management procedures and employee training are to blame for premium increases, CIAB survey respondents said. Carriers are paying out more than ever and more than actuarial analysis predicted, reimbursing ransom payments for 64% of cyberattack victims.
As cyberattacks become more prevalent, carriers mentioned a “more stringent state/federal/international regulatory environment” and “social engineering and increased litigation costs” to explain the increases, respondents added.
In August, President Joe Biden described cybersecurity as a core national security challenge. However, the administration has limited regulating authority over the broad range of businesses affected by cyberattacks and, as a result, encourages private industry to defend U.S. networks from cybersecurity threats.
Cyber insurance carriers continue to reduce limits and increase retentions while focusing on underwriting scrutiny—the latter being a common theme in all lines of business during Q2. The increased underwriting scrutiny has caused risk management protocols to become stricter, including confirmation of endpoint protection, multifactor authentication and isolated backup systems.
Despite rising premiums, 95% of survey respondents noted an increase in clients requesting cyber coverage. Part of the increase in demand comes from clients who haven’t typically purchased cyber coverage and those who experienced a data breach or other cyberattack and didn’t have coverage.
As ransomware attacks and similar concerns increase, contact us today to ensure you’re adequately protected against cyber risks.