Cyber insurance companies stay one step ahead of threats
It’s easy to forget that cyber insurance is a new and developing field. It has nothing like the metrics used for vehicle insurance.
“Automobile insurance is a very mature market because you have a lot of reliable historical data for pricing,” says Gary Glombicki, senior director at Fitch Group.
The relevant cyber data dates back to around 2015.
“As risks evolve, so does cyber insurance,” adds Glombicki. “It’s going to take some time, if ever, to reach some level of maturity.”
Insurance Business America recognizes the 2023 5-Star Cyber Winners for being the top cyber insurers for facing such uncertainty and dealing with the unknown. “In cyber insurance, there is a unique opportunity for insurers and brokers
and is increasingly important to help clients improve cyber resilience and mitigate losses,” says Jacob Ingerslev, SVP for Cyber and Tech Underwriting at award-winning Tokyo Marine HCC.
“Part of it is that as insurers we do a lot of mitigation work that most consumers don’t really see. For the most part, we only alert customers where we find serious vulnerabilities or exposures, and if you don’t have them, you probably won’t hear from us.
What can insurance companies do to make selling cyber insurance policies easier?
During the survey process, IBA asked brokers what insurance companies could do to facilitate policy acquisition. Their responses reveal the following priorities:
- Increase education and engagement
- Ensuring a smooth application process
- Set high limits and keep costs low
- Standardization of terms and coverage
- Recruiting better, more thorough underwriters
For Erica Fischerkeller, account manager with Furman Insurance, it’s all about the basics.
“They can make things easier by helping customers with little or no cybersecurity measures,” she says. “When clients respond, they just have a virus scanner and use a daily email system like Gmail, and then the underwriters reject them. That makes it possible for them to find an agent who advertises only to specialize in cyber. If we can help educate and get safety measures and write policies together, we will be more successful and help people secure coverage that they never thought possible.
As the leader of the E-Risk Underwriting practice at 5-Star Cyber Award winner Croom & Forster, Nick Economidis works hard to simplify cyber insurance.
“We have done a lot of work in the policy forms: while some of our competitors are issuing policies of 60, 80 or 100 pages, we have designed an attractive, easy-to-read, 16-page policy form,” he explains. “At the same time, we make equal efforts to make policy applications easier to read, understand and complete.”
A key area for Ingerslev is closing the awareness gap for cyber insurance in the small business and personal space.
“The ransomware headlines of the last three to four years have certainly helped bridge that awareness gap, but there is still room for improvement,” he adds. “One threat that I always think of as a great awareness piece is business email compromise fraud because it’s something that most people can relate to, both employees and consumers.”
2019’s rise in ransomware sent the US and global markets into tight market conditions.
“The question everyone is asking is, are we going to be in a soft market for the next one to two quarters? I think it depends a lot on what happens in the ransomware landscape,” says Ingerslev. “After a decline in the second and third quarters of 2022, we have seen a gradual return to more ‘normal’ ransomware levels in the last six months, although still not comparable to 2020-21.”
Meanwhile, Glombicki emphasizes the importance of value.
“The question is, what am I paying for and am I getting fair compensation for transferring that risk to an insurance carrier and retaining only and only the risk?” he says. “Because for the last several years, rates have done nothing but go up and people are wondering what value they’re really getting from transferring that risk, in the context of tightening conditions.”
What are the key areas for cyber insurance providers?
IBA asked brokers what they think are the hot spots in the cyber landscape. Among those mentioned were:
- Threat intelligence and threat mitigation
- Processing payments
- Targets SMEs
- Cryptocurrency
- Deepfake videos
One broker, Matt Capel, commercial client executive with Van Wyck Risk Solutions, says his primary growth area is the growing risk of business disruption due to cyber attacks. He says, “Many people are left vulnerable and don’t realize that their cyber insurance program has a separate coverage line item for business interruption that is often limited to a lower coverage amount or not included at all. Another growing threat in cyberspace is social engineering and phishing scams.
Ingerslev points out that part of the market is untapped. “I think the market is relatively saturated in the Fortune 1000 space, although there is still some room for growth. Where we continue to see the most significant opportunities for growth is in small and micro businesses, where penetration rates are still fairly low or where coverage is purchased by many policyholders on a bolt-on basis, which typically means narrower coverage and smaller limits. .”
Economies are bullish on a possible increase in demand from companies for higher limits. “They want or need limits commensurate with that exposure. And companies that do not recognize the importance of protecting computer systems and data, their trading partners will recognize the importance of these issues and demand that their trading partners have adequate (third-party) insurance to protect their interests.” Keep the limit.”
What is most important for brokers
Cyber insurance companies? During the survey, IBA asked brokers to rank what is important for insurers to provide in 10 categories.
1 Coverage Economides: “No one wants to know that a loss is not covered.”
2 Claims Payment/Processing Economies: “What is good coverage if it is not coupled with good claims handling?” Ingerslev: “Coverage and claims payments go hand in hand and will always be the number one reason companies buy cyber coverage and insurance in general.”
3 Underwriting skills Economidis: “The underwriting process should not be a black box. Buyers should understand how their risk control efforts affect underwriting and pricing. Good underwriting management is the key to consistency in terms and conditions year after year.
4 Cyber Response Economies: “At Crum & Forster, we are strong believers that insureds do not want to spend weeks and months dealing with the aftermath of a cyber incident. All they want to do is get back to implementing their business plans. Ingerslev: “Breach response is another important one and it’s good to see that it’s number 4 on the list. This is an area where we’ve seen significant improvement with many insurers establishing in-house incident response teams. If they’re cyber It makes the experience at least a little less painful if it counters the attack and ensures consistent response from competent vendors.”
5 Flexibility Economies: “No two risks are alike. Good brokers work really hard to understand the unique needs of each client. Flexibility is another important, and often overlooked, feature that is the hallmark of a great insurer.”
The Top Cyber Insurance Companies in the USA
AIG
AmTrust
AXA XL
Beazley
Chubb
Crum & Forster
Travelers
Method
To select the best cyber carriers for 2023, IBA enlisted some of the industry’s top experts. During the 15-week process, its research team conducted one-on-one interviews with expert brokers and surveyed thousands more across IBA’s network to gain a deeper understanding of what insurance professionals think about current market offerings.
Brokers were first asked what features they considered most important in a cyber insurance policy and then asked how they rated carriers on those features.
Carriers were measured on coverage, flexibility, ability to handle claims, pricing and most importantly, the strength of the individual products they offer.
