August 25, 2022
What: A recent market report shows how cyber is continuing to pose problems for the insurance industry. Cyber coverage premiums have increased by more than 25% for five consecutive quarters, resulting in insurers raising deductibles and increasing underwriting scrutiny. The average increase for all P&C lines in Q2 was 7.1%.
Why it matters: It is interesting to watch product innovation in action. The normal product lifecycle identifies a new explosive growth opportunity, then it tries to price it, and finally tries to underwrite it. As is often the case, the first attempt has errors and needs to be adjusted, which is the case with cyber. The solution is to either improve the product and risk mitigation or increase pricing, both of which are happening right now.
What: One of Travelers’ cyber coverage customers fell victim to a ransomware attack, and now Travelers is looking to deny claims and end coverage because the insured misrepresented its use of multi-factor authentication on its insurance application.
Why it matters: Many cyber applications now ask for specifics around the insured’s security measures, which questions will greatly impact the eventual price of the coverage. This is the part of product improvement where underwriting rules get improved to reduce exposure.
Read: Travelers Wants Out of Contract With Insured That Allegedly Misrepresented MFA Use
What: In a recent PwC survey, the risk of cyberattacks was named as the top concern for 40% of respondents, just ahead of talent acquisition at 38%.
Why it matters: This concern underscores the explosive growth opportunity in the cyber insurance market. Because the concern and demand for cyber coverage is there, it’s just a matter of putting in the proper controls and properly adjusting the price. It’s exciting to watch a new product evolve to fit the needs of the market.
Read: Risk of cyberattack emerges as top concern of US executives
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