Lloyd’s PCC secures first investment
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2022 will be the year captives covering cyber take off, according to Lloyd’s specialist broker New Dawn Risk.
In its latest prediction for the insurance market next year, Bullock-Webster, head of tech, media and cyber, says that the hardening cyber market has continued in the last year.
“Rates have been increasing substantially, anywhere between 40% and 200%. Meanwhile, carriers are routinely dropping their limits by as much as half and maintaining the same premiums – in effect doubling rates,” he writes.
“Whereas we used to see a lot of single carriers taking a primary limit of $10 million – as recently as 18 months ago – that is now a thing of the past. Today, $5 million is the absolute maximum an insured will get from any single carrier. Meanwhile, capacity is limited, which is significantly disadvantaging first-time cyber buyers or business wanting to move to London, as insurers are reaching their premium income allocation just by their renewal book.”
The outlook for the coming year is no better, he adds. “The general consensus in the market is that the hardening is going to be here for two more years. 2022 is just going to get increasingly more difficult.”
That will lead to businesses increasingly looking to alternatives, with captives “topping the list”.
“In the coming year, we will reach a point where some larger clients no longer see the value in transferring their exposure to the insurance market. They will decide the time has come to self-insure by setting up a new or extending the use of an existing captive,” Bullock-Webster concludes.
The trend will be helped by the increasing availability of cell companies opening up captive solutions to smaller businesses, he adds: “The lower barriers to entry involved with cell captives mean a simpler and more cost-effective alternative.”
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