Three industry insiders give their views on this contentious issue.
Christine Marciano, Cyber insurance broker, Cyber Data Risk Managers:
“While cyber insurance tends to have higher premiums, I believe we will see more companies purchase[it] for the first time in 2016. Clients might scale back the amount of coverage to lower their premium spend, but they will have some coverage.
As the product matures, the cost of coverage will balance out. For now, clients might leave themselves underinsured, and that’s a big exposure, but things should improve as underwriting gets streamlined and risks are priced more accurately.
While the industry anticipates high premium growth by 2020, underwriting must improve in order to sustain any claims – after all, it’s only a matter of time before there are many.”
Spencer Timmel, Cybersecurity and privacy liability product leader, Hylant:
“I do not believe an increase in costs will make it more di‑ cult to attract more clients. Breach events are increasing in frequency and severity, and the plaintiffs’ bar and regulators are more aggressive than ever. The reality of these concerns puts less pressure on the cost of the insurance. Further, the cost of insurance is still relatively inexpensive to the limits clients are purchasing.
The increase in limits will continue to the point where we truly understand how to quantify the risk. If you can confidently quantify the cost of a data breach for the client, they are going to purchase based on the coverage need, not to how much money is budgeted or available.”
Edward Schultz, President, Allan M. Block Agency:
“The cost isn’t necessarily going up, mainly because of business owner’s policies that incorporate cyber coverage. That coverage isn’t at the highest limits, but adding it onto the business owner’s policy has helped mitigate the cost.
The bigger issue is clients aren’t all sold on the need for cyber coverage, when actually the exposures are growing. Newspapers are constantly publishing stories about major breaches, but clients think it’s just the bigger businesses. There’s a lot of education that needs to be done, and that’s the obligation of insurance agents. It’s a lot easier to roll cyber coverage into a business owner’s policy and at least give the client some coverage.”
