Cyber insurance is evolving and here to stay, say underwriters

July 2, 2021

Cyber insurance faces a challenging market, one where capacity has lessened and insurers are tightening up the "gray areas" of coverage. Underwriters aren't restricting coverage so much as "diversifying" based on risk exposure and claim frequency and severity. The current hardening cyber insurance market and focus on sustainability mark a positive step in this still relatively new sector's evolution.

Cyber insurance is undergoing a natural, necessary correction, says Laila Khudairi, head of enterprise risk at Tokio Marine Kiln. The question is whether the market is sustainable, says Gillian Anderson, global head of cyber and technology at SCOR Channel. "The market has evolved in line with what the client needs," she said.

Brokers and buyers are evaluating their true exposure and purchasing what they need, says Kaitlin Upchurch, senior vice president, cyber practice zone leader at Marsh. "It has to be a continuous process of reviewing what we're intending to cover and having the clients review what they think their key exposures are," she said. The result is more sophisticated underwriters and a comprehensive product that works well for insureds.

A panel of underwriters has agreed that underwriting criteria such as geographical location, revenue, customer base, and reliance on technology have become key underwriting factors. "We are writing a complex risk, and with that comes certain expectations of the client and the broker," said Spencer-Sim. The adoption of higher self-insured retentions and coinsurance, she added, is a good thing.

The cyber insurance market is "here to stay" and there are opportunities for brokers, says Amanda Khudairi, of the CyberInsurance Association. The industry has invested significant time, effort, and money in modeling cyber exposure, systemic risk, and pricing, she said. There are still a number of insureds and companies who do not purchase cyber, but there's opportunity there, she says.

To read about this in greater detail please visit: