Beazley’s Cox comfortable with US cyber pricing but market remains ‘brittle’

By Rebecca Delaney

April 29 - (The Insurer) - U.S. cyber insurance rates are showing signs of stabilisation in response to increased cybercriminal activity, Beazley CEO Adrian Cox said on Tuesday, after the carrier reported a rate decrease of 8% across its cyber portfolio during the first quarter.

Beazley's cyber written premiums contracted by 2% in Q1 compared with the prior-year period. However, Cox said on the group's earnings call that there is “material scope for upside” because the first quarter is often affected by adjustments to prior year premium estimations. As such, Beazley reiterated its mid-single-digit growth guidance for 2025.

“I'm pleased with the progress that our team has made in the U.S., and we're beginning to see signs that that market is stabilising in response to increased criminal activity,” said Cox.

“We believe the market is brittle, as we described at the year-end, and can move quickly.”

He added that while notifications of cybercriminal activity have increased following a “brief pause” in 2022, there have not been any incidents within Beazley’s own portfolio that have led to adjustments in guidance.

“The claims environment continues to get more complex. It wouldn't be surprising if the market reacted to that, but we remain comfortable with our own pricing levels, performance and risk selection,” he said.

When asked about U.S. cyber rate adequacy, Cox said that while Beazley is comfortable with current prices in the U.S., the range of performance across the cyber insurance market in North America is notably varied.

“It's very distinctive, depending upon your risk selection criteria, whether you're primary or excess, what industries you're long or short in, and whether it's SME, mid-market or large,” he added.

“I do think that performance this year and last year will vary quite a lot but, given our own real focus on controls and risk management and the industry mix that we have, we are comfortable with where our (U.S.) portfolio is and how it's priced.”

Cox said that Beazley continues to focus most of its investment in the cyber division in Europe, which remains competitive with maintained rate adequacy.

“Frequency of loss outside North America remains lower than in North America, so we are comfortable to continue to grow exposures internationally and continue our investment as such,” said Cox.

“Having said that, we are also very aware of changing geopolitics and the impact that can have on where cybercriminals may choose to ply their trade. Our underwriting of business across the world is adapting to those changing exposures that we foresee, and that may begin to have an impact on the mix of business internationally as we continue to underwrite through the year.”

Cox concluded: “The biggest renewal date for the cyber market is June 30 and July 1. We will have a better idea of the prospects for cyber for the rest of the year as we head into the summer.”