Well-documented cyber breaches in the US and internationally are focusing minds and are helping underwriters increase and speed-up signings.
That is the word from Joshua Ladeau, practice lead privacy & network security, professional services at Allied World US, who tells Bermuda:Re that whereas in the past much of the team’s effort was spent converting non-buyers into buyers, “virtually every entity that comes across our desk now recognises the need for cyber coverage.”
“They might need to limit theirspend due to budgetary constraints, but it is now an issue of when they can afford it and how much,” rather than whether they intend to buy coverage, says Ladeau.
As Al Fantuzzi, senior vice president, professional liability, explains, when Allied World US started offering cyber policies back in 2007, “we were often quoting without actually binding.” That situation has since changed, he says.
The cyber threat is now “omnipresent” explains Ladeau, with recognition of this fact helping to drive a growing market for cyber coverage that is generating upwards of a $1 billion of premium annually in the US.
The realities of cyber risk have also helped to drive down the post-quote cycle time says Ladeau. “Whereas back in 2008 the cycle time post-quote was typically 6 months to a year, now it is three to six months.” It is evident that there is greater urgency in the buying behaviour of firms.
Cyber coverage is also being moved out of bundled policies and being extended on an increasingly stand-alone basis “There have been some significant losses in the space and as a result there is real fear about what cyber losses can do to another book,” says Ladeau.
“Significant losses are encouraging firms to tighten up on bundled programmes. Firms were being a little too flexible in the past,” says Fantuzzi.
Ladeau says that the threat is particularly worrying for those firms viewed by cyber attackers as the “soft underbelly” of an increasingly interconnected global economy.
And it is with just such companies in mind that Allied World launched its recent data breach offering, Privacy//403 SRVS (Specified Response Vendor Solution), which aims to deliver “turn-key” solutions to companies hit by cyber attacks, says Ladeau.
The new policy links breached entities with high-end vendors that can help them respond effectively to a cyber attack. “The last thing insureds need is to vet and pick vendors under duress.” Privacy//403 SRVS helps them build a response that includes notification of breach, monitoring of systems, forensic analysis, regulatory notification and public relations response.
The continuing vulnerability of firms to cyber attack suggests that momentum for growth is set to continue. “Recent cyber attacks have led to deeper and more meaningful conversations between brokers, insurers and clients about their coverage,” says Fantuzzi. Further high profile attacks are unlikely to change matters.
Allied World, cyber, US, insurance, reinsurance