Rates falling but SMEs still struggling to recognise cyber cover’s value – Marsh

Cyber insurance prices are reducing, but insurers’ inability to fully penetrate the SME market is posing a threat to the creation of a secure, cyber resilient economy.

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That was according to Marsh Europe’s head of cyber Gamze Konyar, who spoke during an online seminar hosted by the broker earlier this week (19 June 2024).

Marsh has seen a second successive quarter where cyber rates fell, with quarter-on-quarter premiums in Q2 10% lower on average. 

Konyar added that 60% of Marsh’s cyber clients had seen a reduction in premiums at renewal over the past three months, which was double the level of those who received a discounted rate in the final three months of 2023.

However, Konyar added that the market was still fighting a battle to increase its penetration with SMEs despite the rising risks which left the wider economy increasingly vulnerable to cyber threats.

Cyber reliance

Konyar explained: “We have to face the fact that cyber is not going anywhere.

“Our reliance on technology systems and the ever more complex supply chain creates new risks.”

She added that much of the talk in the market remained focus on the fears of a catastrophic risk event, which she defined as a single event or several connected events that impacted a large number of insureds simultaneously.

“Geographical tensions have added to the uncertainty,” said Konyar. “It has prompted discussion over how cyber policies should respond. The potential for a major event has led to a reaction from the market which has included exclusions and pricing volatility.”

However, Konyar said the cyber market had also seen new entrants, which had improved the situtation somewhat.

“They are bringing capacity and competition into the market and this has prompted talks around a softening market. What I can say is that the market is currently buyer friendly.

“We are seeing more innovation and customisation in terms of the policies which are being offered to our clients.”

However, while insurers are looking to innovate for businesses, Konyar said companies were still struggling to understand, measure and manage their cyber risks.

“Insurance plays a vital role in protecting businesses against cyber risks,” she said.

“However, we do not see any real adoption by SME clients and, unless we address their needs and create solutions that they find attractive, we will not be able to establish a cyber resilient economy.”