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[00:00:00] Chris McMurray: I think the one that's probably on the lips of most underwriters out there is the evolution of AI and how that could potentially be weaponized by threat actors to conduct attacks on businesses. 

[00:00:15] Paul Lucas: Hello everyone, welcome to Insurance Business TV as we dive into the cyber landscape with one of this year's five-star cyber insurance providers. Yes, Travelers Europe is again celebrating that award and I'm delighted to be joined by its Managing Director for Cyber, Chris McMurray. Chris, welcome to Insurance Business TV. 

[00:00:33] Chris McMurray: Thank you. 

[00:00:34] Paul Lucas: So Chris, great to have you with us. What specific features or services make your cyber offering stand out in this increasingly crowded market, especially, of course, as demand for cyber cover continues to rise and insurers introduce more modular and prevention-led products? Yeah, just tell me what makes you stand out because this isn't your first time winning this award, is it? 

[00:00:57] Chris McMurray: Yeah, I think we're three in a row now, which we're very proud of here. And I think there are many things that make up that success. I think experience is one. The cyber market has had many new entrants come into it globally in recent years, but few have the history and track record that Travelers bring to our clients, having been writing cyber since the 90s, beginning in the US, and then expanding into European operation that we have here. And I think that experience allows us to offer our insureds that consistency in terms of not just the breadth of coverage, but the policy from the policy itself, but also that approach to understanding the importance of mitigating the cyber exposure our clients face with our tailored menu pre-loss services available to our insureds. And then, of course, when something does go wrong, we provide a comprehensive market-leading breach response solution 24-7, 365 days a year, to get our clients back on their feet as quickly and as cost effectively as possible. And, you know, dialing into that coverage, you know, as I said, we've got a comprehensive solution covering both first and third party exposures. There's the ability to make that tailored and further enhanced for specific risks. At our heart, we're very much an underwriting company, and cyber is no different to that. So we believe in taking a holistic approach when looking at a potential risk. If a risk, for example, is one or two areas that we feel we could improve on in our cyber security, rather than just decline that risk, we look to offer a solution that benefits the client by making them a better risk and then in turn allowing us to use our experience to be very consistent in our approach. And I've probably said that in past years as well, but I think in the nicest possible way, Travelers are that kind of dull, safe pair of hands. We don't believe in wild fluctuations in coverage or pricing from year to year and we like to give the client that consistent peace of mind that you don't always get in the current cyber market. And I think it's worth noting that whilst I'm described as that kind of safe pair of hands, it doesn't mean that we aren't continually looking for ways to do things differently. I would say from the acquisition of Corvus a couple of years back, to the evolution of our distribution platform, the product itself, the risk services, the way our appetites evolve from just SME for UK and Ireland when I joined a few years back, to a market now who can write business from SME to large corporate over a billion revenue, both on a primary and excess basis. An appetite for risks across many areas of the globe, either through our open market strategy or providing capacity to our local carriers through our cover holder proposition. And that capability to write on primary and syndicate that we're continuing to move forward. And then finally our claims as well, our claims service experience there, that dedicated cyber team that we have, the experience and know-how of how to help a client rectify things as quickly as possible when they do go wrong. 

[00:04:05] Paul Lucas: It was interesting to hear you talk about those wild fluctuations there because I'd love to know how your organization is managing that balancing act, of course, competitive pricing on the one hand with the reality of escalating loss severity at a time when increased market capacity has pushed premiums down despite rising cyber risk. 

[00:04:26] Chris McMurray: Yeah, I think that the benefit of having such experience in cyber means that over that time, we build up a lot of data that allows us to identify patterns and exposure. So for example, if certain industries are viewed as higher risk than others, how we should price our portfolio as a whole by working closely with our actuaries and by doing that it means that we've been consistently profitable in cyber. And as I said earlier, we are very much an underwriting company. We won't jeopardize that profitability by chasing down the market if we don't think that is the right thing to do. It's first and foremost, as I say, that is very much our core. And that consistency matters. So we don't believe in having those wildly fluctuating prices from one year to another because we think of insured value, that certainty and that consistency. And I think by supplementing our underwriting experience with tools such as our outside-in Traveler Scan, the technology that we acquired from Corvus, it helps us understand better the risks that we think are going to be the ones that we want to add to our portfolio and then we can be competitively priced on those risks. And the other thing as well, I think we recognize we don't exist in a vacuum and it is that balancing act between our desire to grow and not being distracted by what can be in the European unsustainable price at times in the market, but by actually keeping our head and keeping our discipline and not getting dragged into areas where we think it doesn't make sense. It means we continue to be consistent but we can make the right adjustments where we need to based on the data we have, not just a desire to be the cheapest market out there and grow in a sensible way through what can be called choppy waters at times. 

[00:06:11] Paul Lucas: Let's talk a little bit about how that market is developing, if we can, because there have been recent shifts towards fewer but more expensive ransomware incidents. Has that changed your underwriting approach, attachment points or sub-limits? 

[00:06:26] Chris McMurray: It hasn't impacted our offering in the sense that we haven't pegged back the limits we put out on ransomware, for example. Indeed, we've actually went the other way. We can offer a 10 mil line now in larger risk when not that long ago we capped that at 5 million. So we've actually evolved to meet the needs of our clients. What we do, though, is we constantly monitor our portfolio to try and identify other industries, other hot topics that we need to be careful with writing. Are we better placed as an excess market on some of those risks as opposed to primary, for example? And it means that we can be nimble and we can be flexible, but we don't look to restrict coverage or limit as... we don't think that was the client's best interest and was going to make the client want to be a Travelers insured. And again, we're also well aware of the current market. And the shift is probably back to where it was, say, five, six years ago, where larger limit deployment has become common again. And like I said, we don't exist in a vacuum. We have to adapt to meet that demand, but we want to adapt to meet it sensibly. Um, so that we're not left behind. At the same time, we are not then having to take decisions on a year to year basis, having to flip flop on our strategy, but can be that sound, consistent market that is available to our clients. 

[00:07:49] Paul Lucas: I don't remember the last time I had a cyber conversation without talking about ransomware, of course. Malware and ransomware do dominate the majority of claims, but where do you see the next major cyber claims hotspot emerging beyond ransomware? 

[00:08:03] Chris McMurray: Yeah, crystal ball gazing is always tricky in our game. It may surprise you a little bit, but in recent years in our portfolio, we have seen almost as many social engineering fraud losses, and at times we have ransomware. So whilst ransomware takes all the headlines, we do see significant activity in that social engineering fraud space that hits businesses of all shapes and sizes on a daily basis, but can be particularly impactful on SME clients. And that was one of the main drivers last year when we updated our product that we moved to an any one claim for that coverage and to make sure that we were adequately meeting the needs of our clients. I think if we do look through a crystal ball for a moment, I think the one that's probably on the lips of most underwriters out there is the evolution of AI and how that could potentially be weaponized by threat actors to conduct attacks on businesses. I think that's something that all cyber insurance carriers are working on right now in terms of their modeling and how that's potentially going to pan out. We're not seeing a meaningful impact at this point, to be honest. But I think all of us would definitely consider that's a potential real challenge in the not too distant future. And I think the big thing is where I was always to stress, you know, regardless of what the next hot topic is or the next big concern, it is very unlikely that we'll be able to take away the human element that's involved in the majority of these losses. So whether it's a human not securing the network adequately to prevent an attack, or someone clicking on a link that they shouldn't which opens the door to a bad actor. To prevent those losses, it cannot be stressed enough the importance of everyone playing their part in an organization and having the relevant training to help them identify and respond should they experience an attack. 

[00:09:56] Paul Lucas: And we might not be able to stare accurately into a crystal ball, but talk to me a little bit about the future for your company. How is Travelers Europe positioning itself strategically to stay distinctive rather than commoditized, I suppose, as capital flows into cyber underwriting and competition continues to intensify? 

[00:10:15] Chris McMurray: I think that's where we really need to lean into the Travelers brand. It's one of the things that we have that some of the newer entrants don't have. We've got that strong brand out there, obviously originating in the US, and it's how we exploit that to allow us to get to where we want to go. We have that experience, that longevity, and that comfort for insureds that we haven't just appeared to dip into cyber and will disappear as soon as some of the losses start to mount, as some others have in the past. Also, we've invested in our underwriting team, which has grown significantly in scale over the last couple of years, but also in terms of how we distribute our products. So our online MyTravelers platform, by looking to add the Traveler Scan in there, widening the parameters in which brokers can quote and bind business on there in recent times. The menu of our pre-loss services that we launched at the back end of last year, which will continue evolution there as well. The product itself and how we continue to take that forward to make sure that that can compete in the market and meet the needs of our clients first and foremost. And probably for me, the most important part of all is making sure that our breach response and claims proposition continues to be built out. Because as our book continues to grow, we need to make sure that that builds out to the scale that we are there to respond. For example, if there was a large scale event, that we've got the scale there to respond. And I think the juggling part of this is you need to do all that with your proposition, but also at the same time, make sure you're pricing it competitively so that you stand out in what is, as you quite rightly say, a very busy market space. 

[00:12:01] Paul Lucas: Yeah, well, it's been great to have you with us, Chris. No doubt Travelers Europe will be a top contender for four in a row as well. So huge, yeah, huge thanks for your time. And of course, thanks to you for watching. We'll see you next time right here on Insurance Business TV.