Beazley to launch standalone cyber war product
New cyber war wordings did have a dampening effect on business in the first quarter, as Beazley predicted in its year-end results, but this is beginning to dissipate, the re/insurer's chief executive says
New offering will be ‘more than just a buyback’ of recently introduced exclusions, re/insurer’s chief executive, Adrian Cox, says
Beazley is planning to launch a standalone cyber war product later this year.
The company’s chief executive, Adrian Cox, said the Lloyd’s re/insurer is hoping the product will be released this summer, adding it will be more than just a buyback of newly introduced cyber war exclusions.
He said Beazley had appetite to write war risk in other lines of business, so it made sense to offer similar coverage to cyber clients.
“We offer war… as part of our political violence cover, we offer war for some of our aviation clients and some of our marine hull clients, so if we have the appetite to write war business, why wouldn’t we do that with some of our cyber clients as well?” he told analysts.
Referencing the cyber war exclusions Beazley rolled out at the end of 2022 – ahead of the new Lloyd’s cyber war wording, which came into effect at the end of last month – Cox said the new product would “not [be] just a buyback of the changed wording, [it] is war coverage”.
“Most clients are happy to accept the new war exclusion and the clarity that gives because, fundamentally, what we’re trying to do is to be as clear as possible about what coverage there is and there isn’t”
His comments were made to analysts following the announcement of the business’s first-quarter earnings, which showed gross written premiums increased 12% to of $1.37bn compared to the same quarter last year.
Beazley’s cyber business grew 24% to $280m in the first three months, with particularly strong growth in Europe despite the new war wordings and more modest rate increases.
The cyber growth also reflected some favourable prior-year premium adjustments.
Cox said the new cyber war wordings did have a dampening effect on business in the first quarter, which was predicted in Beazley’s year-end results. But this was beginning to dissipate and the business’s full year expectations for cyber remained unchanged.
“Most clients are happy to accept the new war exclusion and the clarity that gives because, fundamentally, what we’re trying to do is to be as clear as possible about what coverage there is and there isn’t,” he said.
He said there were some carriers still happy to write on the old war wording, but there was growing pressure on insurers to adopt the new exclusions including from regulators and reinsurers.
“I think the reinsurers were expecting the insurance market in general to adopt new cyber war wordings at 1/1 and were fairly disappointed they didn’t and are being quite vocal to that effect,” Cox said.
“We’ll see how that plays out through the year-end and into 2024,” he added.
Addressing cyber rates – which have been moderating across the market – Cox said Beazley was confident its pricing was adequate and it was looking to put more exposure on its books this year.
Cox added he was aware of concerns in the market the volume of ransomeware attacks – which had eased as cyber actors focused on the war in Ukraine – had started to pick up again, but Beazley had not yet seen this impact its book.
“We’re obviously very happy our own claims frequency hasn’t yet been impacted,” he said. “We cannot assume it won’t be and we have to continue to be quite vigilant in our own pricing to make sure we spot new things happening and we react to them quickly.”