October 28, 2016 by Canadian Underwriter
The Council of Insurance Agents & Brokers (CIAB) in the United States has reported that nearly 40% of polled policyholders who purchased cyber coverage in the last six months have increased their coverage levels.
Earlier this week, the CIAB released the findings of its Cyber Insurance Market Watch Survey, which polled 88 respondents from 66 unique firms on “all aspects of the cyber insurance market from take-up, to premiums and sophistication of their clients’ cybersecurity programs.”
According to the survey, roughly 29% of respondents’ clients purchased some form of cyber liability and/or data breach coverage in the last six months – an increase of 4% since April 2016, CIAB said in a press release on Wednesday. Results also indicated some levels of price stabilization, at least in certain sectors, as nearly 72% of respondents said rates stayed roughly the same over the past six months.
“This survey is showing several trends developing in the cyber insurance market,” said Ken A. Crerar, president and CEO of the council, in the release. “We received more robust responses to this survey than either of our previous cyber surveys because more of our members are engaging in this market and engaging at more sophisticated levels than they were even a year ago.”
The most recent study revealed that 22% of respondents’ clients purchased cyber insurance for the first time in the past six months, while 70% of those with cyber insurance have standalone policies.
Respondents also felt there was adequate capacity for most of their clients’ needs, citing difficulties for the largest clients, those in the most highly-targeted industries such as healthcare, and for clients who have already had a cyber claim. One broker from Indiana explained that capacity is generally adequate, “but if there have been claims, those are very difficult. They have always been difficult, but I think accounts with claims are getting tougher to place.”
The typical cyber insurance policy limit was US$3 million.
Purchasing decisions once again varied from large to small and medium-sized organizations. Large accounts tend to purchase cyber coverage for the risk transfer benefits, while small and medium-sized organizations also heavily considered contract compliance and post-breach response resources in their decision to purchase cyber coverage.
“As our broker members are investing more in resources to educate themselves and their producers about cyber risk, they are passing this knowledge on to their clients who are making better, more informed decisions about their cyber exposure and cyber insurance needs,” said Crerar. “This is exactly the role of the broker and we see a lot of growth potential in this market for our members.”