Despite the fact that cyber insurance rates have been rising, they are still not yet an accurate reflection of the potential catastrophic effects that a widespread cyberattack could have, said Evan Greenberg, CEO at Chubb Ltd.
According to Greenberg, even thought the prices are rising, it’s still low when compared to the risk.
“The pricing environment is pretty good,” explained Greenberg as quoted in a Claims Journal report. “But … that is not addressing by itself the fundamental issue…. Like pandemic, cyber has a catastrophe profile to it.”
As the world becomes increasingly digitally interconnected, there will only continue to be a rise in exposure concentrations, according to Greenberg. The underwriting activities at Chubb have also experienced systemic risk exposures as a result of the rise in digital threats, he added, pointing out that the company is adapting to start to address it.
The CEO’s comments arrived as the insurer reported its second quarter results. Even as Greenberg says that the cyber insurance rates are not a reflection of the real risk, the company still widely exceeded analyst estimates, on some part because of the size of the premiums increases that did occur.
The increased cyber insurance rates helped the company to greatly improve its second quarter results.
The insurer’s adjusted operating income reached $3.62 per share. This leapt far beyond the average analyst prediction of $3.01 for that quarter, according to Refinitiv IBES data. Comparatively, during the same quarter in 2020, the company experienced a 56 cents loss. This occurred during the early months of the COVID-19 pandemic.
The quarter’s net income was $5.06 per share, compared to the same quarter in 2020, when it was a 73 cents loss.
Greenberg went on to state that the company’s stance on mergers and acquisitions had not changed. “We’re disciplined. Money doesn’t burn a hole in our pocket,” he said.
Though Greenberg feels that cyber insurance rates remain inadequate, he does feel that current market conditions will remain solid. “Based on what we see today, I am confident these market conditions will continue,” said Greenberg.
