As we work through the second half of 2022, the Errors & Omissions (E&O) and Cyber Insurance marketplace is becoming more buyer-friendly than a year ago.
Insurers continue to stress conservative messaging regarding pricing, underwriting scrutiny and coverage. Uncertain macroeconomic and geopolitical conditions that may impact cyber claims frequency and severity are a focus for many insurers. However, results through midyear 2022 are more favorable than 2021, and that has started to impact pricing and capacity for clients.
Aon’s data shows that claims frequency has declined over 40 percent midyear, year-on-year. While baseline pricing remains significantly higher than in same period of 2020, renewal increases are declining, with some clients experiencing flat to declining rates where overcorrections were made in 2021. More capacity is now available for clients who may demonstrate appropriate risk management and security controls throughout underwriting diligence. Many clients have alternative risk transfer options to consider, a stark contrast to recent renewal cycles where constrained capacity often left clients with few or no choices while working through renewals. Underwriting diligence remains a challenge for many clients, however, the process and requests are relatively more consistent and can be addressed proactively rather than reactively.
Aon continues to focus on timing, process and creativity as fundamental concepts as we advise our clients through an evolving marketplace that is now presenting opportunities for well-positioned organizations. Clients can strategically take advantage of these opportunities, while weighing the value of coverage breadth and continuity, insurer relationships and pricing.