A focused view of 2021 risk & cyber insurance challenges
As 2021 closes, we anticipate that the Errors & Omissions (E&O) and cyber insurance marketplace may continue to become more challenging. While we still expect the marketplace to be challenging as we enter 2022, we anticipate pressure around pricing to be less severe than what’s been experienced in 2021.
Our hope is that 2022 will also feel more comfortable for insurers and insureds alike as insurer underwriting strategies become clearer and insureds have improved perspective on the challenges faced as they continue to secure E&O and cyber insurance.
As predicted, the year has been full of volatile market dynamics across the product segments. It is, therefore, more critical than ever to start placement work early. The underwriting process continues to show more rigor. With that element of the placement process in mind, time can be an incredible asset for clients.
Time helps clients to address new, or additional, underwriting questions and concerns, and can allow for additional context to the underwriting submission – which is critical insofar as cyber security is often not amenable to simple yes or no responses to questions around controls.
Cyber security is often about a holistic approach to managing cyber risk that requires a more expansive explanation. Our brokers strive to add value through creativity. Our role is to exercise the marketplace and develop solutions that help clients reduce volatility from their balance sheets.
The first half of 2021 met expectations, much to the frustration of insureds. Insurers leaned on five common levers to help determine their perceived best strategy to offer E&O and cyber insurance going forward:
We anticipate that the aforementioned trends will continue throughout 2021, and into 2022. Aon’s Cyber Solutions has received guidance from some of the largest insurers in the product segment that we should anticipate 40% – 80% rate increases throughout 2021.
It should also be noted that insureds in certain classes of business, insureds with programs that have been historically priced aggressively or insured’s with deficient underwriting controls will likely see greater fluctuations than the anticipated rate increases for the remainder of 2021 and into 2022.
Our goal as we provide a midyear snapshot of the 2021 E&O/cyber insurance marketplace is to share loss and pricing trends to date, feedback from insurers as we close out 2021, and most importantly, key recommendations for clients as we all continue to navigate a challenging risk and challenging E&O and cyber insurance market.
Download the Midyear 2021 Errors & Omissions | Cyber Insurance Snapshot report below to learn more. For additional insights, watch the Midyear Errors & Omissions | Cyber Insurance Snapshot: Navigating Cyber Risk In A Dynamic Cyber Insurance Marketplace webinar recording.