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Overview of Japan’s Cyber Insurance Market
The Japanese cyber insurance market continues to expand, though at a more modest pace than in previous years. This growth is primarily fueled by a rising number of policyholders, as highlighted in Gallagher Re’s recent market analysis. The April 1 renewal report by Gallagher Re indicates that the global reinsurance market is experiencing increased capacity and offering more flexibility to buyers, demonstrating the sector’s robustness following strong financial performances.
Japan’s 1.4 Reinsurance Renewal Insights
April 1 marks a crucial renewal period for Japan’s reinsurance sector, and Gallagher Re’s report delves into outcomes across various business lines, including cyber insurance. The analysis reveals a notable uptick in demand within the small and medium-sized enterprise (SME) segment, likely due to the frequent cyber incidents and attacks affecting several industries.
Market Dynamics and Pricing Trends
Despite this surge in demand, original insurance rates have largely remained stable, with only slight adjustments in specific sectors. Additionally, treaty results have stayed profitable despite several mid-sized losses emerging across the market over the past year. Buyers have benefited from a relatively soft reinsurance market, characterized by abundant capacity. An increasing number of reinsurers are showing interest in international cyber, and some buyers have managed to secure higher ceding commissions.
Compared to the previous year, pro rata cyber reinsurance rates in Japan have remained flat or increased by up to 2%, while risk loss-free rates have decreased by 5% to flat, according to Gallagher Re.
Future Outlook and Competitive Landscape
While overall demand for cyber reinsurance coverage remains largely unchanged, strong underlying business performance could prompt a reassessment of quota share cession percentages in the coming months. Analysts have also noted that competition among a wider range of quoting reinsurers is exerting pressure on excess of loss pricing.
Furthermore, reinsurers continue to scrutinize cyber war exposures, though less intensely than last year, as the majority of original policies now include a market-standard war exclusion.
