Surplus Lines Market Keeps Up with Demand for Cyber Liability Coverage

In Texas and across the nation, the surplus lines insurance market is keeping up with the increase in demand for cyber liability protection, according to the Surplus Lines Stamping Office of Texas (SLTX).

SLTX recorded a 412 percent total increase in cyber premium over the past five years in Texas. In 2016, $66 million in cyber liability was written in Texas, which is a 35 percent increase from $49 million in 2015. Year-to-date, $33.5 million in premium has been recorded in 2017, and SLTX projects end-of-year totals could meet $70.6 million.

On the national level, the amount of cyber insurance premium for the property/casualty industry in the United States grew by 35 percent in 2016 to $1.35 billion, according to a report by Fitch Ratings. SLTX reported that Fitch believes the number could be an underestimation due to difficulties singling out cyber information from other coverages in some policies.

Among cyber insurers, the top 15 writers were responsible for around 83 percent of the market in 2016, with more than 130 total insurers writing cyber policies during the year. The largest writers of cyber coverage were American International Group Inc., XL Group Ltd. and Chubb Limited.

Overall, SLTX recorded $2.7 billion in surplus lines Texas premium for the first 6 months of 2017 for all lines, up from $2.5 billion for the same period in 2016. With the addition of exempt and multi-state premium, the year-to-date surplus lines premium total exceeds $2.8 billion.