Unlock the Editors Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.One of the worlds biggest cyber insurers is pulling back from the market as it contends with rising claims and falling prices, even as rivals extend their bet on policies covering hacks and ransom demands.Beazley reported this week that cyber gross written premiums, a measure of top-line revenue, declined 8 per cent in the nine months to September 30 to $848mn, sending shares in the FTSE 100 insurer tumbling on the day.Theres more claims, and theyre more expensive, chief underwriting officer Paul Bantick told the Financial Times. He said a rise in ransomware attacks and hackings had been fuelled by rising geopolitical volatility, as cyber gangs used such tactics to sow distrust.What were trying to understand is why the markets not reacting to those things, he added.While Beazley has trimmed its exposure, Chubb and AIG two of its largest rivals in the US market have maintained or grown their books. The diverging strategies highlight volatility in the nascent sector.Chubb and AIG declined to comment.Despite the rise in claims and high-profile attacks on businesses, premiums for cyber insurance have been falling since early 2024, according to broker Marsh, due to rising competition for a finite pool of clients and a broader flood of investment into speciality insurance.Theyre all fighting for new business, said Kelly Butler, head of cyber for Marsh. Its not an oversaturated market, but theres a limited pool of buyers.Businesses in the US and UK have purchased more cyber coverage in recent years due to the rise in claims. Despite rising demand for policies, margins have been eroded as hedge funds, private equity firms and other investors flooded the insurance market.Some risk managers also doubt that cyber policies will cover enough of the costs of an attack, after exclusions came under criticism from brokers and clients. In response, Lloyds of London, the insurance marketplace, has pointed to the need to limit liability for potentially sweeping claims stemming from cyber risks, in order to offer any cover against the peril.While cyber insurance prices had fallen 6 per cent to 7 per cent for each of the past four quarters, Butler said the price slide was now slowing.Chief executive Adrian Cox told analysts on a call that Beazley was willing to continue to shrink its revenue from cyber in the US, where he said the business line had become unprofitable, to protect margins.He warned that cyber insurance prices could experience extreme swings in pricing if others continued to cut their rates.Beazley shares have since pared their losses, leaving them about 2 per cent lower since the start of the year and valuing the insurer at just over 4.8bn. The stock has gained 120 per cent since 2020, however.
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