Specialty Insurance Blog

AM Best Webinar – Surplus Lines Insurance Insights

I participated in an A.M. Best Co. webinar titled Inside Today’s Surplus Lines Market (see here, here & here).  The panel reviewed the surplus lines sector of the U.S. insurance market and the highlights from a new report on that sector.  Since 1994, the Derek Hughes/NAPSLO Educational Foundation (NAPSLO) has provided a grant to A.M. Best to produce a report on the surplus lines insurance sector. The report examines regulatory developments, distribution, solvency, availability, and coverage. The surplus lines market provides coverage for risks that the standard insurance market is unwilling or unable to insure (see here).

A few of the key quotes:

Income statements, rather than balance sheets, are driving rate movement in the market - David Bresnahan, President, Lexington Insurance Co.

The market is heading in the right direction.  We are seeing some gradual increase in rates and tightening as we go, but it's fragmented. – Robert Sargent, President, Tennant Risk Services, & President, the National Association of Professional Surplus Lines Offices (NAPSLO)

There is still a lot of competition in the market – Brady Kelley, Executive Director, the National Association of Professional Surplus Lines Offices (NAPSLO)

 

Specialty Insurance Expertise: Tennant Risk Services 
Supporting Insurance Entrepreneurship: Tennant Capital Partners

 

New Cyber Risk Threats Increase the Need for Insurance

Recent warnings and attacks indicate that Cyber Risk, and the need for Cyber Risk Insurance, continue to grow rapidly.  For example, the FS-ISAC has raised the cyber threat level to high:

The Financial Services Information Sharing and Analysis Center, which is widely known as FS-ISAC, raised the cyber threat level to "high" from "elevated" in an advisory to members, citing "recent credible intelligence regarding the potential" for cyber-attacks as its reason for the move. (see here)

Private computer networks are vulnerable, attacks are increasing rapidly, and companies are not taking adequate steps to protect them from hacking according to the US government:

NSA Director General Keith Alexander said the number of computer attacks from hackers, criminal gangs and foreign nations on American infrastructure had increased 17-fold from 2009 to 2011 (see here)

And again Internet Explorer has been found to have vulnerabilities:

Microsoft is urging Windows users who browse the Web with Internet Explorer to use a free tool called EMET to block attacks against a newly-discovered and unpatched critical security hole in IE versions 7, 8 and 9. But some experts say that advice falls short, and that users can better protect themselves by surfing with an alternative browser until Microsoft issues a proper patch for the vulnerability. (see here)

Aggressive risk management, involving continual security review, is critical.  Specific recommendations are widely available, including here.

In addition, Cyber Risk Insurance should be part of any organizations protection.  Because the risks of privacy breaches, data thefts and hacking are rapidly escalating, particularly for small businesses, and the penalties for data breaches are increasing as well (see here), Cyber Risk Insurance has become an essential part of any organizations protection.  But not all insurance agents and brokers are regularly offering this coverage to their commercial clients, and they should be.  Is yours?

Cyber Risk Insurance is not difficult to explain to potential clients, and at least basic protection should be in place.  As a wholesale broker, we provide Cyber Risk Insurance to all types organizations through retail insurance agents and brokers.

Specialty Insurance Expertise: Tennant Risk Services
Insurance Entrepreneurship: Tennant Capital Partners