Cyber premium prices climbed by 34.3 percent in the fourth quarter of 2021, according to results from The Council’s Commercial Property Casualty Market index. The fourth quarter marked the 17th consecutive quarter of premium increases, with the average premiums across all account sizes increasing 8.7 percent, down slightly from the 8.9 percent recorded in the third quarter of 2021.
Prices increased for all lines, including workers’ compensation.
The Council of Insurance Agents and Brokers announced the results of its survey March 4 in a news release.
Respondents reported an average premium increase of 34.3 percent for cyber, the first time since the post-9/11 hard market that a line has seen an increase of more than 30 percent. Premiums also continued to increase for the other commercial lines: umbrella and commercial property, lines for which respondents reported an average increase in premiums above 10.0 percent.
“Cyber continued to raise alarm bells across the industry,” said Ken A. Crerar, president and CEO of The Council. “The increase in premiums for that line continued unabated in Q4 2021, and the frequency and severity of cyber claims continued to climb. The industry must take steps to confront this unique, constantly evolving risk.”
Carriers seemed to be taking those steps when it came to understanding cyber risks. A common refrain among respondents was that carriers would outright refuse to provide quotes or terms if the insureds could not show they had multifactor authentication in place, and very often respondents would report carriers asking for significantly more than that. Things like endpoint detection and response, privilege access management, staff training and others were all key requirements from carriers, according to respondents.
Beyond that, in order to further incentivize insureds to adopt stronger risk management practices, carriers would, according to one respondent from a large Midwestern firm, “offer self-service risk mitigation programs like best practices, sample procedures, trainings and videos. Many carriers also offered consultations with cyber vendors or cyber experts. Many offered discounted software solutions and some offered reimbursement for certain pre-approved vendor payments.”
Relatedly, client education and risk management were two areas many brokers believed firms could find opportunities to grow and expand. “We need to become trusted advisors rather than insurance salespeople,” said one respondent from a large Southeastern firm. “So much of what we are doing now requires true risk management in addition to providing quality insurance programs.” Another respondent from a large Northwestern firm said, “Employers need guidance in every facet of the business. Brokers can be a great business partner that provides that guidance and direction.”