Howden Re’s Webb: Cyber market shackled by poor data, but improving

Growth in the cyber market is poised to rebound, but the segment is hindered by inconsistent data collection techniques, according to Matthew Webb, head of cyber clients and strategy at Howden Re.

“Data within cyber in general, both from a policy perspective and a claims perspective, needs to be improved, and more granularity of data needs to be collected,” Webb told The Insurer TV at Howden Re’s recent cyber reinsurance summit at Ascot.

Webb attributed this to insurers being hampered by legacy tech systems that often aren't even matched across different geographies.

“I think one of the major challenges in insurance, in general, is different systems, legacy systems, and different business units across multiple geographies collecting different levels of data,” he said.

Webb said that collating better data will enable carriers to better quantify the risks they are exposed to, better protect their reserves, and allow them to offer clients better rates in the long run.

“ Some of the most advanced carriers that are collecting data can get really granular data. And that's a major advantage to them, both in their approach to underwriting the risk and in understanding where the claims are coming from, flowing that through into pricing,” he said.

Webb also highlighted the impact better data can have when it comes to negotiating cyber reinsurance rates.

“When they deal with reinsurers, being able to provide superior levels of data can often result in better terms.”

As a result of the issues around data collection and quality, Webb views cyber as one of the few insurance markets where experience offers carriers very few advantages.

“Generally I'd say that it's the writers of cyber who have started up more recently. So, they're in a great position of understanding exactly what data needs to be collected, and also setting up their underwriting systems' pricing models at the same time to collect that data,” said Webb.

Stability returns to cyber

On the subject of the new entrants in the market, Webb remarked that demand will return to cyber, with the sector primed for growth after the turbulence of the last three years.

“I think we'll reach a period of stability from a rating standpoint after the recent turbulence over the oscillation in rates over the last 24 to 36 months.”

He added: “I'm a strong believer that demand will return to the industry as well. Certainly we saw that reduced in 2023. And we're expecting it to be below historical levels in 2024.”

However, Webb predicted that the market will double the rate of growth in 2024 compared to 2023.

“Historically, it's grown at a 30 percent compound annual growth rate. Last year, our estimates show it only grew 5 percent,” he said. “This year, looking at forecasts from carriers, we're estimating it will grow 10 percent.”

Watch the full interview to hear Webb’s thoughts on:

  • Cyber penetration rates in different customer segments
  • What the cyber market will look like in 2030
  • How cyber insurers set a measure of risk tolerance