BREAKINGVIEWS-Cyber risk unsettles insurers as well as clients

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.) By Aimee Donnellan DUBLIN, Dec 2 (Reuters Breakingviews) - The dynamics of insurance are simple enough. Own property in a storm-battered state like Florida, and you face a bulky premium to cover the risk that a hurricane flattens your home. But faced with the equally disturbing threat posed to companies from cyber attacks, the market looks rather more dysfunctional. Nervy corporate CEOs have enough horror stories demonstrating what happens when they skimp on cyber insurance. Last year, $184 billion AT&T (T.N) revealed over 100 million customer records were accessed in a breach. Earlier this year, $9 billion Marks and Spencer (MKS.L) said it only had enough protection to cover a third of the damage from its cyber attack. And UK carmaker Jaguar Land Rover recently had to get state assistance following its own meltdown. Yet instead of spiralling, the price of coverage against cyber risk is going down. Globally, cyber rates declined by 6% in the third quarter, according to Marsh. And last week, UK insurer Beazley (BEZG.L) said that year-on-year its cyber premiums were down 8% in the nine months to September. It added they had been falling since 2022 despite what it deemed the “increasing frequency and severity of ransomware claims in the market”. One issue is a flood of new entrants inflating supply. Historically, cyber risk was offered by specialists like Beazley, Chubb, Munich Re (MUVGn.DE) , Axa (AXAF.PA) and Fairfax Financial (FFH.TO) . In recent years, a new breed of technology-driven rivals funded by hedge funds, private equity and other investors like Cowbell and Coalition have flocked to the market. Demand, meanwhile, may not be as strong as it seems. Cost-conscious bosses may reason that they might just avoid a painful cyber hit. That sort of complacency was reinforced when the UK government stepped into support JLR. Either way, the falling prices may not be a permanent fixture. Beazley is approaching the U.S. cyber market with caution given CEO Adrian Cox now sees it as “unprofitable”. Other insurers have reason to be wary, despite the sector’s growth profile. A persistent concern is that cyber claims remain less frequent than other risks like flooding. The relative lack of data makes it harder to price a policy. One insurance executive told Breakingviews that companies who find themselves on the receiving end of a ransomware or other information technology attack are reluctant to add to the stock of existing information about cyber implosions by elaborating much on what went wrong. As things stand, investors aren’t rewarding prudence. Beazley shares are off 9% since it struck a more cautious tone. One key takeaway of its stance is that competitors chasing market share may wind up with the same costly bill as incautious CEO clients who elect to swerve coverage and hope for the best. Follow Aimee Donnellan on LinkedIn. CONTEXT NEWS Beazley reported an 8% decline in gross written cyber premiums in the nine months ending September 2025. Adrian Cox, CEO of the UK insurer, said the U.S. market for cyber insurance had become “unprofitable”. Big traditional cyber insurers increasingly compete with new entrants (Editing by George Hay; Production by Shrabani Chakraborty)