Last year was very much a buyers' market for Cyber insurance, but with claims rising again, the current soft market won't be sustainable over the mid- to long-term, and agents must prepare themselves for significant rate increases.
RPS calls this volatility "purgatory" for agents — even if the current market makes it easier to do business — and predicts that these favorable conditions for customers aren't going to last.
To effectively manage the volatility created by these constantly shifting sands, agents must be smart in how they present solutions to their clients.
Cyber insurance has never been about getting the cheapest product available, but in this soft market, finding the right product is more important than ever, and agents need to make clear to their clients that the low premiums offered today aren't going to be available at the next renewal — it's just not sustainable — and they need to be prepared.
Agents should use this situation as an opportunity to enhance coverage based on a thorough review of the business needs of the company, using the budgets available to purchase cover at a higher level. Then when prices go up next year, there's always the option of reducing coverage but still being able to afford adequate cover.
The risk of offering a lower premium this year is simply that budgets for next year will be cut, and then there won't be enough money available in the budget to purchase the minimum level of cover required once premiums rise again.
The issue, however, is that there's often not enough time given to discussions around Cyber cover.
"The problem with Cyber insurance being an ancillary product for many is that it's often the last thing that's discussed at a renewal meeting," RPS Senior Area Vice President Nick Carozza says. "And while it's usually the smallest premium, if you look at claims, it's the line of coverage that has the highest chances of getting hit.
"So agents need to sit down with their insureds and make sure they're giving Cyber insurance applications the time they need, and not just answering yes or no to questions without fully understanding the ramifications."
Learn more about what's next for the Cyber insurance industry in the 2024 US Cyber Market Outlook.
