Meeting the Increased Demand for Cyber Liability Coverage
The demand for Cyber Liability Insurance continues to increase as more companies become aware of how damaging a breach can be to their reputation and how costly an incident can be to their bottom line. Recent cyber attacks against Anthem, Sony, Target, Home Depot and others have only further highlighted the need for cover. In addition, calls from the White House, state insurance departments and others on the importance of cyber security to mitigate risks keep the emerging trend front and center.
Over the last several years – from 2006 to 2013 – according to Advisen’s buyer penetration index, there was a five-fold increase in Cyber insurance purchases, further highlighting the growth potential of this emerging market. Moreover, while estimates vary widely, the Cyber insurance market globally represents over $1 billion of written premiums, according to an Advisen report. The vast majority of this is written in the U.S. where approximately 35 insurers write Cyber insurance as a stand-alone product, and many more provide the coverage as an endorsement. Furthermore, recent findings by industry analysts report that spending on Cyber Liability insurance nearly doubled between 2013 and 2014, to about $2 billion.
A Look at the Cyber Market
A survey of insurance professionals (carriers, wholesalers, brokers) conducted last year by Advisen along with reinsurer, Partner Re, took a look at what specifically is driving the demand for coverage, which industries are purchasing the coverage, and what coverage is seeing an increase in value, among other issues. Here are some of the survey findings:
- The vast majority of respondents indicated some degree of growth in demand for Cyber Liability, with respondents observing that the “sales cycle has shortened since two years ago,” and “hit ratios are improving over the past six months – instead of binding one out of every ten quotes, now binding one out of every five.”
- The top three drivers of growth in the Cyber insurance marketplace include: news of a cyber-related loss, followed by increased education and awareness of the product, and the requirement to buy the coverage by a third party.
- Increased demand for Cyber Liability products were most prevalent in the retail sector followed by healthcare, financial services, professional services, and utilities sectors.
- In addition to the standard coverages (notification, forensics, credit monitoring, etc.) available under Cyber insurance, there has been an increase in demand for a policy to include Business Interruption (BI) and Contingent Business Interruption (CBI).
It’s clear that with media coverage focused on cyber risks and increasingly more high-profile cases coming to the forefront, Cyber Liability insurance is gaining in importance as a critical component of a comprehensive protection program. Yet as the survey indicates educating businesses on the need for coverage and making them aware of the risks is still required to reach more insureds.
At Caitlin Morgan, we can provide assistance in providing your clients with a comprehensive Cyber insurance plan. We work with several carriers to provide Cyber coverage to respond to a myriad of exposures. We can customize a policy for the programs we write, including for the healthcare industry, and provide coverage for a wide range of businesses. Give us a call at 877.226.1027 to help you meet the demand for this must-have protection.