Among the improvements noted by the report:
- New capacity and insurers continue to enter the market
- Organizations are strengthening their cyber hygiene
- Carriers are enhancing risk engineering and risk management capabilities
- Communication is strengthening between governments, law enforcement, corporations and the insurance sector
“The outline of a more stable market on the horizon is becoming clearer as time passes,” Marsh said. “We are optimistic the market will continue to build on this momentum and continue on its path toward stabilization.”
However, Marsh said that while the market is improving, carriers’ actions continue to lack coverage clarity, contract certainty, and insight into pricing mechanisms.
“This causes great frustration for buyers as they try to make informed decisions about the investments needed to strengthen cyber resilience and to be insurable,” Marsh said. “AS the cyber insurance market continues to mature, it is important for all stakeholders to apply the lessons learned, not just those of the past two-plus years, but over the market’s 25-plus-year history. Doing so will help the market become stronger and more resilient over time.”
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Insurers are continuing to revise their strategies in an effort to stabilize the market, Marsh said. This includes implementing operational and tactical actions including changes to risk appetite, product composition, and support services offered to insureds.
According to Marsh, the implementation of those strategies has sometimes led to unintended negative consequences, which can be further complicated by:
- The market’s continued growing pains
- The constant, ubiquitous nature of cyber risk
- Continued concerns about ransomware, supply chain exposure, security and privacy regulations, and catastrophic and accumulation risk, including nation-state activity
“When insureds do not feel like they are provided with clarity, transparency, and coverage certainty, their confidence in and comfort working with the cyber insurance market declines,” Marsh said. “This occurs even as the product continues to prove to be effective in protecting balance sheets, paying claims, and enabling organizations to responsibly understand, measure, and manage cyber risk.”
Marsh said insurers should pay close attention to the possible effects of new strategies before they are broadly introduced. Maintaining a constant feedback loop between brokers, insurers, insureds and other stakeholders can help to mitigate some of these challenges, the company said. By providing all parties with transparency, that feedback loop will also build trust throughout the cyber insurance market.