Within a decade, cyber liability coverage evolved from a specialized product to an essential need for many businesses. Growth and healthy loss ratios made this segment a profitable line for much of this period. The tables turned dramatically in 2020, with healthcare cybersecurity shortcomings as a leading cause. A tightened market is here, and agencies and businesses will have to adapt. As an agent serving the business liability market, it will pay to understand the forces at work and the practical steps you can take to keep clients on your book.
What Factors Drive the Tighter Cyber Insurance Market?
Two events intersected in 2020 to create a perfect storm for the cyber liability insurance segment. First, ransomware predators upped their game and extorted ever-larger corporate targets. Double ransomware, where predators threatened to expose sensitive customer information, was a game-changing escalation. With double ransomware, even companies that built robust backup strategies acquiesced to multi-million dollar ransom payments. Adding to the irony, criminals even targeted a large insurance provider that offered cyber liability coverage.
The increasingly professional cyber predators took full advantage of another trend: the work-at-home movement. In the spring of 2020, the corporate response to the COVID-19 pandemic pushed an army of information professionals into makeshift home offices. Workers who once securely accessed networks in the workplace were now logging in from home and creating a sea of attack vectors. Ransomware criminals took full advantage and wormed their way into countless networks.
The criminals’ success triggered a wave of claims on cyber liability policies. Temporarily paralyzed by ransomware attacks, victims also filed claims on business interruption policies. With this domino effect, some cyber liability players have exited the segment. Remaining carriers are lowering limits, raising premiums and tightening eligibility. These events pose a substantial challenge to businesses and agents alike, but some practical steps can make a measurable difference.
How Can You Retain Clients?
An early start on the renewal process will help you keep your cyber liability clients on your book. Yes, delivering bad news on premiums and coverage limits will be part of this process. Nonetheless, starting early will help you document their cybersecurity efforts and maintain their eligibility.
Your healthcare cyber liability clients are the most at risk in this environment. A growing attack vector for cybercriminals is the rapid adoption of internet-connected handheld devices, often lumped under the “internet of things” label. These IoT devices dramatically improve patient care in clinics and resident safety in senior facilities. The utility of IoT devices has led many providers to neglect healthcare cybersecurity practices. As you work with your healthcare clients, remind them of the stakes involved and urge them to implement network security best practices.
Tight market periods are a hard fact of life in an insurance career. Nonetheless, resourceful and proactive agencies can set the stage for long-term future growth.
About Connected Risk Solutions
At Connected Risk Solutions, we use our expertise and experience to provide insurance information and programs to those who serve long-term care and senior living facilities. Since 2007, we’ve been offering insurance and risk management plans designed to help our agents give their clients the ability to achieve continued growth while simultaneously protecting against loss, containing costs and increasing profitability. With three offices to serve you in Chicago, Illinois; Phoenix, Arizona; and Burlington, Connecticut, we do everything we can to make your experience with us as professional and transparent as possible. To learn more, contact us at (877) 890-9301.