Further cyber rate decreases anticipated in 2025 after reductions in H2 2024: Woodruff

By Michael Loney

Feb 5 - In a new report entitled 'Cyber Insurance in 2025: What to Expect', Woodruff Sawyer said: “We expect rate decreases to continue as we move into 2025, barring any widespread cyberattacks that result in a greater financial impact than any event we’ve seen.”

The retail broker noted “good news” for cyber insurance buyers in 2024.

“Despite some headline-grabbing claims, insurance capacity remained high, creating a competitive market environment that led to nearly two thirds of Woodruff Sawyer’s clients realising cost savings in their cyber insurance programs last year.”

Woodruff’s figures showed that 66 percent of clients saw a decrease in their costs at cyber insurance renewals in the second half of last year, which was down from 69 percent in the first half of 2024 but higher than the 64 percent in the second half of 2023.

“Pricing in the cyber insurance market has continued to fall from the peak prices of early 2022; however, the pace of decreases slowed in 2024 compared to 2023,” the report said. “Pricing remains elevated at double the pre-hard market year of 2019.”

Woodruff noted a “more nuanced picture” of how different industries and sizes of companies have fared throughout 2024. Some 81 percent of clients saw cost savings in the second half of 2024 when purchasing a package policy that includes both technology E&O and cyber coverage.

“We expect the soft market conditions with favourable pricing to continue for most segments in 2025. However, not all decreases will be equal. Larger organisations will see smaller decreases than small organisations, and rate decreases in the technology sector will be smaller than in other industries considering the amount of rate relief that technology companies have realised over the past few years,” the report said.

The current market environment for cyber insurance retentions has proven that retentions tend to increase in hard markets and stay at that level rather than come back down, Woodruff noted.

Over 70 percent of its clients saw no change in their self-insured retentions throughout 2024, and the broker expects this stability in retention levels to continue in 2025.

Woodruff conducted its annual survey of cyber insurance carriers, including established domestic carriers, Lloyd’s syndicates and startup MGAs.

“Although ransomware remains the most significant threat for underwriters, our survey reveals privacy violations and data breaches have gained prominence compared to last year,” Woodruff said.

In addition, 37 percent of underwriters believe cyber risk will increase greatly in 2025, fewer than the 56 percent the previous year.

In addition, 48 percent of underwriters predict an increase in premiums (37 percent say “slightly”, 11 percent say “greatly”), compared with 81 percent last year (all of which said “slightly").

However, 32 percent said premiums would stay the same and 21 percent said they would decrease slightly.

The survey also showed that 53 percent of underwriters expect cyber coverage to expand slightly in 2025, while 26 percent (versus 12 percent last year) expect scrutiny to decrease.

Woodruff also commented that cyber risk continues to grow due to factors such as data collection practices, third-party and systemic attacks, regulatory enforcement, the growing use of artificial intelligence, and changing privacy laws and litigation.

“Due to their widespread impact, attacks on the technology supply chain are highly attractive to those looking to cause maximum disruption. When you consider how long it takes some companies to timel[ily] patch known vulnerabilities, the attackers can exploit the vulnerability for months, if not years, and continue to drive losses for cyber insurance carriers,” the report said.

“As a result, we expect a lot of underwriting scrutiny around third-party risk management controls in 2025,” it added.