In Lloyd’s second quarter market news, Rachel Turk, head of performance and strategy, warned that cyber risk vectors continue to evolve, with artificial intelligence adding further complexity and uncertainty through the use of threat actors and raising new questions around potential coverage.
Lloyd’s has classified the network business for a “marginal” adequacy assessment, indicating significant pressure on current rate margins.
Additionally, its forward trajectory has been labeled as experiencing “rapid softening” due to market softening and declining rates, which will require increased underwriting discipline and clearer underwriting coverage.
In a second-quarter market message, Turk emphasized that clarity is a lever within market control, noting that it is not always clear whether underwriters intend to include or exclude liability risks in cyber policies.
She warned that such ambiguity could create downstream problems, and while acknowledging Lloyd’s’s complicated history in prescribing wording approaches, she urged the market to regulate itself through greater consistency and transparency.
Turk continued, “Even if we include AI as a risk vector, interest rate adequacy remains under pressure, and in the absence of historical catastrophe loss data, catastrophe assumptions in the market are easily interpretable.
“As markets mature, the severity and overall uncertainty reinforces the need for conservatism and caution is advised.
“We are updating our cyber RDS suite to reflect the evolving threat landscape, but I hope the market will push us to go further and lead the way.”
