Contrary to some press, the Cyber Risk Insurance (also called Data Breach, Privacy and Network Security insurance coverage) market is not being held back, and is in fact quite competitive. A recent article, “Cyber insurance 'held back' by lack of data”, Financial Times (here, paywall), is an example. This article is misses the point(s).
Cyber risk is significant, varied and changing rapidly. To be effective, the Cyber Risk Insurance market needs to be responsive to customer needs, and it is (see here). It is not being held back. The market is incredibly competitive, anyone can get coverage, and if anything, underwriting may be too relaxed and the pricing too inexpensive. Data, or lack thereof, is not holding the market back.
Certainly there are some insurers who are cautious, but there others that are experienced and aggressive. There will not be a market of consistently broad policies at cheap prices anytime soon. Because of the changing exposures, there will continue to be differing underwriting approaches, with differing coverage and pricing, for the foreseeable future.
Appropriate coverage is an issue – there are too many Cyber Risk Insurance policies focused on data breach. Exposures have moved well beyond breach, with ransomware (here & here) and cyber crime two examples of new(er) and critically important exposures for all small and medium sized businesses. But there are a number of insurers offering policies that offer very comprehensive Cyber Risk Insurance coverage – well beyond data breach.
There continue to be new exposures developing, and some types of insureds need specialized or customized coverage. As it has been in the past, the Cyber Risk Insurance market is responsive to these new and specialized needs. We have written some of these unique risks, including providing coverage for breaches outside of an insured's system, and extending protection for losses to the insured's customers.
Some insurers have quite a bit of data. But for Cyber Risk Insurance at this point in time, prior history is not necessarily a good predictor of future results. And the speed of change in cyber does not allow adequate time for credibility (of stats) to be established. So the best underwriters are meeting the customer's needs by using their experience and expertise to offer comprehensive coverage and realistic rates.
What the market does need is effort in the distribution segment to analyze Cyber Risk Insurance coverage and recommend the best fit to their customers – what we do every day as a specialty wholesale broker.
Cyber Risk Insurance coverage varies widely, so a thorough review is essential to ensure that comprehensive coverage is in place.
Tennant Risk Services is a specialty wholesale broker and underwriting manager, and delivers expertise, markets and exemplary service to our retail insurance agent clients in the placement of professional liability and specialty insurance (E&O, D&O, EPL, Cyber Risk, Specialty). We excel at hard to place accounts.
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