Cyber Risk Insurance – Evolving, Complex
Cyber Risk Insurance is a critical coverage for attorneys, and the American Bar Association has a Guide to Cyber Coverage (see here). While the Guide acknowledges the active market for Cyber Risk Insurance, that comprehensive coverage is available, and that coverage changes constantly, the article claims that no one understands the coverage. The article also claims that polices are “too unnecessarily complex for their own good.”
We have a different perspective. While cyber exposures are relatively new and changing quickly, and the application of coverage is, in many cases, untested, there are experts in the cyber risk area. And the policies are complex, and for good reason. In some cases they are very comprehensive.
Cyber policies cover a wide range of exposures, involve multiple lines of coverage, and are evolving. The market is responding to very creative criminals who have been quite successful in finding ways around most IT security measures. Exposures are varied and go well beyond the basic costs associated with a breach of credit card information, so policies must incorporate a range of coverages to provide the protection that most organizations need. And the reasonable level of risk management measures required frequently change as well. This doesn’t mean that Cyber Risk policies cover everything – they do not. Underwriters must constantly balance their underwriting requirements, primarily information and expected client security measures, with client coverage needs.
However, underwriters in some cases have gone too far in trying to eliminate losses. Long applications for cyber risk insurance with detailed technical technology questions are still common even though they are not applicable to most small and mid-sized companies. And laser exclusions used by some underwriters, while effective in removing difficult exposures from coverage, create more challenge for customers and brokers. Bottom line, the market is working well as the exposures evolve and underwriters respond.
Comprehensive Cyber Risk Insurance is available at reasonable pricing using an easy and efficient application process. Cyber Risk Insurance is an essential coverage for business of all sizes for protection from both criminal attacks and employee error; it should not be optional. Coverages vary widely and can be tailored to cover the cost of breaches, forensics, business interruption, crisis management and PCI assessments.
Tennant Risk Services is a specialty wholesale broker and underwriting manager, and delivers expertise, markets and exemplary services to our retail insurance agent clients in the placement of professional liability insurance (E&O, D&O, EPL, Cyber). We excel at hard to place accounts.