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Standout insurers fighting cyber threats
Cyber is one of the most dynamic sectors of the insurance industry these days. While in the past few years there’s been increased competition from carriers, and greater capacity and coverage terms, there’s recently been a hardening in the market. Meanwhile, a surge in cyberattacks has increased claims and underwriting losses. Underwriting standards are tightening, with more documentation required and decreased risk appetite; ransomware attacks continue to give rise to an increasing number of high-cost claims; and business email compromise risks are a growing concern. In 2022, the industry can expect to see significant rate increases as well as coverage restrictions and increased scrutiny for greater cybersecurity protocols.
IBA is proud to recognize the 11 winners of its 5-Star Cyber Insurers 2022 awards, the companies that won brokers’ votes for their wide range of cyber coverage products that help businesses deal with this quickly evolving threat landscape.
“In recently published reports, we have likened the cyber insurance market to a teenager searching for its identity, complete with the accompanying irrational behaviors, moodiness, and unpredictability”
Steve Robinson, Risk Placement Services
Cyber insurance market chaos
According to Steve Robinson, national cyber practice leader at Risk Placement Services (RPS), one of the winners of this year’s 5-Star Awards, the cyber insurance market has been difficult to pin down.
“In recently published reports, we have likened the cyber insurance market to a teenager searching for its identity, complete with the accompanying irrational behaviors, moodiness, and unpredictability,” says Robinson.
“In May 2022, we discussed this continued journey through the lenses of claims trends, market movement, regulatory landscape, geopolitical influence, and coverage dynamics. In short, the market has changed at warp speed over these past two years and is continuing its changes in what I refer to as the ‘five P’s’ to this day: process, players, products, pricing, and political landscape.”
Michelle Aliperti-Urbielewicz, vice president of underwriting for errors and omissions (E&O), cyber and media at fellow 5-Star Award winner CNA, agrees with Robinson, noting that cybercriminals continue to wreak havoc on businesses of every size – and the results are staggering.
“As cyberattacks continue to escalate, every business is at risk,” she says.
“Overall, the cyber insurance market has been firm over the past two years. Additionally, coinsurance and ransomware sublimits have become common. We’ve also seen that many carriers are requesting a ransomware supplement be completed prior to quoting. One challenge the industry is facing is that it can be difficult to find terms for risks that do not have key controls in place, such as an endpoint detection and response tool and multi-factor authentication.”
Brad Gow, the global insurance cyber product leader at award winner Sompo International, offers a more measured assessment of the industry.
“The cyber market has matured significantly over the past 24 months, with technical underwriting becoming more granular and the utilization of baseline network security standards now commonplace,” he says. “Regardless of the rate environment, we see carriers taking a more thoughtful approach going forward.”
“There is a lot of room for growth in the small and midsized account space, since many of these businesses have not historically purchased cyber”
Michelle Aliperti-Urbielewicz, CNA
Rising to the challenges
For Sompo, the key challenge has been the increase in ransomware claims over the past three years.
“[This] has impacted the profitability of the entire cyber insurance market,” says Gow. “Sompo International is now asking more questions and ensuring that necessary security and resilience controls are in place.”
Robinson highlights three particular challenges faced by Risk Placement Services over recent years.
“There have been rapidly escalating price increases for all classes of business,” he says. “RPS gets out in front of them to ensure the best outcomes for our retailers and their insureds.
“There has been an evaporating market for public entity and education cyber risks. Our broad market access and the ability to provide carriers with balances helps to improve terms, conditions, and availability of coverage for the most difficult-to-place classes of business.
“And growing so quickly has forced us to put recruiting and hiring in hyper drive. We are actively recruiting and interviewing candidates to help expand our growing base of industry experts around the entire US.”
“As no organization is immune to cyber threats, we anticipate that take-up rates will continue to increase, especially in SME and middle-market segments”
Brad Gow, Sompo International
What makes a 5-Star Award winner?
Each of IBA’s winners were judged in the categories of first party coverage and third party coverage; claims payment/processing; flexibility/customization of policies; underwriting expertise; access to risk mitigation/risk evaluation partners; pricing; breach response; and education on the policy for the broker.
How were they able to excel in these areas?
“A well-designed product and service offering and an experienced underwriting team,” says Gow. “In a challenging environment, it is also very important to articulate your strategy early to brokers and insureds to avoid any surprises at renewals.”
Aliperti-Urbielewicz credits CNA’s team of underwriters specializing in E&O, cyber, and media.
“Our company offers competitive primary and excess policy forms,” she says. “Cover can be purchased monoline or bundled. We offer both admitted and non-admitted policy forms depending on the applicants’ needs.
“CNA claim professionals have deep expertise in the coverages the company writes and the industries it serves. The claim team is empowered to provide innovative solutions and the best possible customer service experience. The suite of risk management services, including CyberPrep, is offered to all CNA cyber policyholders, providing clients with a network of cybersecurity professionals and services to actively identify, mitigate, and respond to cyber risks.”
Growth opportunities in cyber
Of course, what’s past is past, and present conditions are fleeting. What do this year’s winners think are growth opportunities for the near future?
“There is a lot of room for growth in the small and midsized account space since many of these businesses have not historically purchased cyber,” says Aliperti-Urbielewicz. “As the frequency of ransomware claims continues to increase, we have seen an increase in new buyers. We have also seen more opportunities to write excess layers on larger risks because many buyers are increasing the amount of limits purchased, or other carriers are decreasing capacity at renewal.”
Robinson believes there’s growth potential in expanded digital media offerings in light of evolving risks, such as deepfakes and crypto/NFTs. He also sees potential in combination policies for autonomous vehicles in the transportation sector, and with robotic process automation in manufacturing.
Meanwhile, Gow expects that, “as no organization is immune to cyber threats … take-up rates will continue to increase, especially in SME and middle-market segments.”
- CFC Underwriting
- Houston Casualty
- Sompo International
Insurers were measured on the strength of their relationships with brokers, ability to handle claims, underwriting expertise and, most importantly, the strength of the individual products they provide.