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A softer-than-expected market kept insurance premiums for technology companies down or flat in some lines in 2024, according to a new report from business insurance platform Embroker.
Embroker’s 2024 Business Insurance Index: Tech Sector found average errors & omissions/cyber premiums for tech companies decreased 4% from 2023 to 2024 — compared to a 12% uptick from 2022 to 2023. Meanwhile, directors & officers premiums remained flat, going up less than one percent year-over-year for the second year in a row.
Employee practices liability insurance premiums saw the highest average premium change with an 11% uptick in 2024, which was largely on-trend with the 10% premium increase from 2022 to 2023.
Embroker said increased competition among insurers and ample reinsurance capacity helped drive premiums down and allowed businesses to secure lower-cost coverage.
Nevertheless, the report noted that this affordability came with trade-offs. The softer market for tech companies was predicated on large carriers introducing new exclusions and coverage limitations, making their policies less comprehensive and leaving businesses vulnerable to gaps in protection, the report said.
“There is more to the current soft market than meets the eye, as it does not reflect a reduction in overall risk for the tech sector,” said Andy Lea, chief insurance officer at Embroker. “In addition to increased competition and reinsurance capacity, tech businesses appeared more informed and filed fewer claims — all of which helped keep premiums more favorable in 2024.”
He continued, “However, with the evolving landscape of cyber threats and potentially significant shifts in regulatory policy, we could see the market tighten in short order.”
The index analyzed full-year 2024 insurance purchasing data generated by Embroker tech customers — from early-stage, pre-revenue companies to companies with over $25 million in funding or over $5 million in revenue.
Embroker found some tech businesses expanded coverage — particularly in E&O/cyber and D&O policies — in response to last year’s softer-than-expected market. Others were more cautious, adjusting insurance budgets to fortify key protections while scaling back in lower-risk areas. New compliance laws like AI investment restrictions for tech firms with Chinese ties helped keep EPLI top-of-mind as well, Embroker added.
Embroker said companies that grew from between $5 million and $25 million to more than $25 million in funding saw the biggest jump in E&O/cyber pricing, with premiums surging 108%. Meanwhile, D&O premiums increased by 116% for companies boosting funding from between $5 million and $25 million to over $25 million. EPLI premiums also rose by 106% for companies that grew from 10-30 to over 30 employees.
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